Although I will be as brief as possible, you will appreciate, convener, that there are a number of amendments in the group.
Amendment 17, in the name of Andy Wightman, would remove the object of
“investing in inclusive and sustainable economic growth”.
It will not surprise Mr Wightman to hear that I do not support his amendment. Inclusive and sustainable economic growth is a key part of Scottish Government policy. I also point out that the bank will be investing in propositions that can command some rate of return and by definition it will be investing in economic growth. Of course, we want that growth to be inclusive and sustainable.
Amendments 3 and 4, in my name, give effect to a number of the recommendations made by the committee at stage 1 that the Scottish Government has subsequently accepted. We have been clear throughout our work to establish the bank that it will deliver a range of financial, social, environmental and economic returns.
We considered carefully the recommendations made by the committee concerning anchoring non-financial returns in the bill and the alignment between the vision for the bank and its objects. Amendments 3 and 4 respond to those recommendations. In particular, amendment 4 responds to the climate emergency that the First Minister declared earlier this year. It provides for a link to the world-leading climate change legislation that the Parliament recently passed.
In practice, amendments 3 and 4 will require the bank to take social and environmental wellbeing into account in its investment decision making, including whether a prospective investment would contribute to or negatively impact on environmental or social wellbeing, for example.
Amendment 4A, in the name of Maurice Golden, would further support that goal, and I am pleased to support it, subject to taking the opportunity at stage 3 to address some drafting concerns.
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I also welcome amendment 26, in the name of Rhoda Grant. Amendment 4, in my name, refers to supporting
“the transitions required to meet the net-zero emissions target”.
Amendment 4 intends to capture the range of transitions that we know are needed across various sectors of our economy if the target is to be met. Amendment 26 clarifies that the bank should also promote the just transition principles, and I am happy to support it.
Amendment 57, in the name of Rhoda Grant, also refers to the just transition principles. That seems to duplicate provision elsewhere, and I ask Rhoda Grant not to move it for that reason.
Further, although supporting the just transition principles will be one of the key means by which the bank will deliver environmental and social returns, it will not necessarily be the only means. It is worth while keeping those elements separate so that they each speak to all the bank’s activities.
Amendments 27 and 28, in the name of Rhoda Grant, and amendment 30, in the name of Jackie Baillie, seem only to duplicate objects that are in the bill. For that reason, I ask members to reject them.
I turn to amendment 29, in the name of Jackie Baillie. We will debate fair work on several occasions this morning. For clarity, I intend to support amendment 47, in the name of Willie Coffey, which provides for a fair work direction to be issued to the bank.
As Jackie Baillie will be aware, employment law is reserved. For that reason, as well as to ensure a tailored approach to fair work, a duty to issue a fair work direction was included in the South of Scotland Enterprise Act 2019, rather than a definition of fair work itself. The direction will define fair work for the purposes of that direction and it does not give a legal meaning that can be cited in other legislation. Therefore, amendment 29 lacks legal meaning and, regrettably, I cannot support it.
Further, the procurement legislation cited in amendment 29 applies to a narrow set of circumstances and defines a living wage as
“remuneration which is sufficient to ensure an acceptable standard of living.”
Requiring that the bank checks that measure against the entire workforce of an enterprise, which might include workers who are based outside Scotland, is unlikely to be possible in practice. That is in no small part because the measure contains a degree of subjectivity that would require a lot of local and workforce-specific knowledge to accommodate.
Amendment 58, in the name of Rhoda Grant, clarifies that the bank should contribute to the achievement of the Scottish Government’s social and environmental, as well as economic, policy objectives. I am happy to support amendment 58.
Amendment 5, in the name of Jackie Baillie, and amendment 18, in my name, seek to provide for a new object for the bank relating to its contribution to promoting equalities. As the committee heard at stage 1 and as Jackie Baillie has rightly been pursuing, there is an opportunity for the bank to make a substantial positive contribution in that respect. There are well-evidenced issues regarding access to finance for women-led businesses in particular, and the bank will be subject to the public sector equality duty and the Scotland-specific duties under the Equality Act 2010. Amendments 5 and 18 seek to reinforce that.
There are two reasons why I consider amendment 18 to be preferable. First, its reference to
“promoting the advancement of equality and non-discrimination”
gives the bank a clear remit to engage beyond its own activities to seek to influence the wider sector.
Secondly, the drafting of amendment 5 risks the bank being seen as responsible for the elimination of discrimination, which it cannot achieve on its own. The bank must certainly contribute to that, and the drafting of amendment 18 recognises that.
For those reasons, I ask Jackie Baillie not to press amendment 5 and to support amendment 18. If there are further points that we can work on together in that regard, I assure Jackie Baillie that I will be happy to engage with her on those matters.
I cannot support amendment 31, in the name of Jackie Baillie. The amendment would provide for a new object for the bank of “meeting regional investment targets”, which the bank itself will set. I have spoken previously about the importance of the bank serving all of Scotland and not just the central belt. I suggest that the approach that Jackie Baillie appears to be promoting in amendment 31 is not the right one.
The committee raised the issue when taking evidence from stakeholders back in May. It heard from Robin McAlpine that
“it is important for the bank to monitor in regional terms where its investment goes. However, it must be driven by demand”.
Ray Perman from the Royal Society of Edinburgh also said that taking a merit-based approach, rather than making pro rata allocations of investment to regions,
“is absolutely the right approach.”—[Official Report, Economy, Energy and Fair Work Committee, 7 May 2019; c 33, 32.]
Mr Perman highlighted the experience in the 2000s of regional venture capital funds in England, where some regions had a shortfall in demand that meant that the money could not be committed. Ultimately, the then UK Government moved to national level funds to address that.
Jackie Baillie’s amendment 31 does not reflect the evidence that the committee received or lessons that have been learned elsewhere, and I do not support it. However, I understand the intention and drive behind the amendment.
I turn to amendment 59 in the name of Claudia Beamish. Although I appreciate the intention behind amendment 59, it reads like a duty to be placed on the bank, rather than an object that sets out the bank’s purpose as an organisation. There is a need for some clarity here and amendment 59 risks starting the development of an exhaustive list of elements that the bank should take into account in its decision making. The objects of the bank is not the right place to do that.
Further, amendment 4 would require the bank to “promote environmental wellbeing”, which would clearly encompass biodiversity. Amendment 58, in Rhoda Grant’s name, clarifies that the bank will support the Scottish Government’s environmental objectives. Supporting biodiversity is a key part of that. If Claudia Beamish were to return at stage 3 with an amendment that was more complementary to those provisions, I would be willing to consider it carefully. However, I would be reluctant to support amendment 59 as it is currently drafted.
I urge members to support amendments 3, 4 and 18, in my name, amendment 4A, in the name of Maurice Golden, and amendments 26 and 58, in the name of Rhoda Grant.