Green Investment (Edinburgh)
The final item of business is a members’ business debate on motion S4M-00096, in the name of Marco Biagi, on green investment in Edinburgh. The debate will be concluded without any question being put.
Motion debated,
That the Parliament welcomes Vince Cable’s acknowledgement of Edinburgh’s position as a frontrunner for the location of the new green investment bank; would welcome a united campaign supporting Edinburgh as the location; considers that the city is supremely qualified to be a location for the bank as it has expertise in the sectors relevant to what are expected to be the proposed bank’s future activities, and hopes and looks forward to the 50 to 100 highly skilled jobs that it has been estimated that the bank would bring and the vote of confidence in Scotland’s future that an Edinburgh-based green bank would represent.
17:03
It is my pleasure to open the first members’ business debate of the fourth session of Parliament. I begin by recognising the work that has been done since the campaign started last September, which has been led by the Edinburgh Chamber of Commerce, the City of Edinburgh Council, the Scottish Government and its agencies, and parliamentarians from all parties.
I am a relative newcomer to the issue, but I wanted to give Holyrood an early opportunity to place firmly on the record our support for the project, which runs across all parties and all regions of Scotland. As a Parliament, we will disagree on many details, such as the role of the fossil fuel levy in the green investment bank. Those differences of opinion are real, but they are normal; we cannot wish them away, nor should we seek to. Their existence just serves to highlight how significant a development it is when we do agree. The Parliament is at its best when it is in agreement. Together we united to pass the Climate Change (Scotland) Act 2009 and together, I think, we are united in supporting Edinburgh as the natural place, the logical place, and in all respects the best place for the green investment bank.
I speak as the member of the Scottish Parliament for Edinburgh Central, and two key considerations stand out for me in this matter—that the green investment bank would be good for Edinburgh, and that Edinburgh would be good for the green investment bank. What benefits would the bank bring to Edinburgh? As the motion states, the United Kingdom Government, in its May update paper on the GIB, estimated direct employment from the institution of between 50 and 100 jobs and direct capital of about £3 billion, which will be rolled out in three stages up to 2015. That might seem quite modest compared with, for example, Standard Life, which has just shy of £200 billion in capital and thousands of employees, but the impact on Edinburgh should not be measured in such narrow terms.
In the election, we in the Scottish National Party presented an ambition for the whole of Scotland that was built on our vision of Scotland playing a central role in the low-carbon industries of the future. The people of Scotland endorsed that vision overwhelmingly, and those industries are already significant. In 2009, 10 low-carbon exports from Scotland totalled £845 million and growing, and they will grow further. HSBC predicted in “Sizing the climate economy” last September that the global market in low-carbon industries will reach $2.2 trillion by 2020. As with all things these days, the most important market is estimated to be China, but I do not want our renewables revolution to be built wholly on imported Chinese technology.
As Mary Scanlon alluded to last week in our debate on green energy, there is a problem in that green investments in Scotland can be porous. We are not yet at the centre of the technology. For example, about half of all wind turbines in the world are made in Denmark. As a country, we in Scotland have for many years run the risk of being on the edge of developments, of being a branch economy and of being an importer. As I said in the green energy debate, the prize of the GIB is to be at the heart of the financing of new technologies—offshore wind, energy efficiency and waste reduction. Through steps such as the Saltire prize, the leasing agreements and the 100 per cent renewable energy target, together with the sheer political will that is being shown in Scotland, as a country we are starting to take our rightful place in the development of the technologies. However, as a global financial centre of long standing, Edinburgh has its own specialist niche to fill in the new economy. The GIB would put Edinburgh firmly on the global low-carbon investment map.
Convincing Edinburgh of those benefits is not the hard part. Convincing Westminster is more of a challenge. However, it is now widely acknowledged that the only credible bids on the table are those from Edinburgh and London. If I was Vince Cable, I would be a little bit worried, because for civil servants in Whitehall it has gone from being a default, almost as far as to become a reflex, that when a new institution is set up, it is set up within sight of the Thames. It would be the easiest thing in the world for the machinery of the relevant department just to continue the habits of a lifetime, but the case that has been put forward for Edinburgh is formidable. It was tremendously well presented in the March business case that was compiled by Grant Thornton and put forward by Edinburgh Chamber of Commerce, which—with their forbearance, I hope—I will now shamelessly plagiarise.
At the heart of the business case is a simple proposition:
“Edinburgh is the only location in the UK which can bring finance and the clean energy industry together in a single location ... To support successful commercialisation, it is important that the GIB is closely connected to where the action is.”
Some 38,000 people work in financial services in Edinburgh. Our financial sector continues to outperform that of the UK as a whole. Assets under administration in Scotland are estimated to total £1.3 trillion, and with tax increment financing, Scotland is also beginning to be at the forefront of innovation in project financing, just as we are—through Aquamarine, Pelamis and others—increasingly at the forefront of innovation in technology. We are indeed “where the action is.” In fact, our green potential has been praised in the chamber so often that listing our share of Europe’s offshore resource has become almost a cliché, so here is a different illustration. Our peak demand for electricity in this country is around 6GW; our practical offshore resource is a little over 206GW.
All of that goes without saying. I could spend every minute of every debate for the next five years shouting from the rooftops the virtues of my new constituency, but I think that I would try the patience of other members. Therefore, I say that although I was elected by Edinburgh Central, it was to serve as part of the Parliament of Scotland for all of Scotland, and all of Scotland stands to benefit from the investment. Members from other parts of Scotland will testify to that, and I look forward to their contributions.
I hope that, today, we can come together as parliamentarians across our divides to state the case not just for Edinburgh but for Scotland. In that spirit of consensus, let me—for the first and perhaps the last time—quote the Secretary of State for Scotland, who said of Edinburgh that
“the city’s strategic location and financial expertise make it an ideal place to locate the Bank.”
I could not agree more, and I hope that his own colleagues are in as much agreement with him as I am. Locating the GIB in Edinburgh would be a sign to one of the world’s fastest-growing industries that Scotland is open for business.
I call Mark McDonald to be followed by Sarah Boyack.
17:11
Thank you, Presiding Officer. You caught me slightly on the hop as I was not expecting to be called quite so soon, but there we go.
I begin by congratulating my colleague Marco Biagi on securing his first, and indeed this session’s first, members’ business debate. Some people will be asking why this man from the north-east is speaking in a debate that relates to locating the green investment bank in Edinburgh. Marco Biagi summed it up well at the end of his speech when he said that the bank would benefit the whole of Scotland, not just Edinburgh, and the north-east obviously has a particular interest.
Aberdeen—and the north-east in general—is the base of the offshore sector and is widely regarded as Europe’s oil capital and offshore energy capital. A great number of transferable skills in the industry can directly transfer to the renewables sector.
In my maiden speech, I alluded to the importance of keeping as much money in and flowing around the Scottish economy as possible. I used the example of a community scheme in Aberdeenshire where, sadly, the money had to be borrowed from overseas to finance a project. Anything that can be done to keep money circulating in the Scottish economy should be done.
We in Aberdeen have acute experience of dealings with Whitehall when it comes to financing for energy. I invite Marco Biagi and anyone else to speak to some of the key players in the offshore industry in Aberdeen about the dealings that they have had. They are not always entirely complimentary, so anything that we can do to bring the decision making in finance much closer to where the action will be is entirely appropriate. I therefore commend Marco Biagi for his approach.
I recognise and understand that a large number of members will want to contribute, some of them with a much greater geographical proximity to Marco Biagi’s constituency and the location itself. However, I think that it is important that we send a message that this issue is not just Edinburgh focused but Scotland-wide.
The member will be aware that the green investment bank is a United Kingdom initiative and that the business case for Edinburgh recognises that it is as important for us to draw from expertise in Newcastle as in Aberdeen. Does he accept that that is to Edinburgh’s strength?
Absolutely, but the key point is that we want to headquarter as much of the renewables market, including the investment bank, here in Scotland. We are undoubtedly the nation that will lead the way in renewable energy.
Before Kezia Dugdale intervened, I was just about to say that all too often in Scotland we can be tribal between our cities, with different cities claiming right over other cities. However, this is one issue on which we as a nation can unite. All cities in Scotland can unite behind Edinburgh’s case because it will be to their benefit.
17:14
I congratulate Marco Biagi on securing his first members’ business debate and on choosing such an excellent topic. It is highly appropriate that we debate the issue as one of our first members’ business debates in this Parliament. In the previous Parliament, there was strong support for the green investment bank across all the parties, which I hope we will see again tonight—in fact, I am sure that we will.
I agree with Marco Biagi’s comments about the excellent work that has been done by Edinburgh Chamber of Commerce. It is not enough to assert that Edinburgh would be an excellent place to locate a green investment bank; the real detailed work and the business case have been absolutely crucial. The fact that there is a serious competition between Edinburgh and London is the result of that excellent work by the chamber of commerce, which has lobbied mercilessly and effectively over the past few months. It is important that we all agree on the issue in this early debate. In the previous Parliament, a Labour amendment attracted cross-party support, and there is strong support both here and at Westminster for locating the green investment bank in Edinburgh.
As a Lothians MSP, I support the case for locating the green investment bank in Edinburgh not just for the jobs that it would create, much as I would welcome those, but for the significance of having it here. It is not a question of its being good for Edinburgh; Edinburgh is simply the best location for it in the UK considering the huge investment that we have already made in the renewables industry and the fact that we already have the legal and financial expertise in Edinburgh from companies doing deals at the moment for the massively ambitious raft of renewables projects in Scotland, particularly in offshore renewables. Much of that work is being undertaken in Edinburgh, as can be seen from the fact that renewables companies are choosing to base themselves in Edinburgh. Given the future expansion in low-carbon industries across Scotland, it makes sense for the green investment bank to be located in Edinburgh, and one has only to look at Edinburgh’s higher education and research capacity to see the expertise that is on tap.
There is also access to key sectors in Scotland through the links to Glasgow and Aberdeen, which are only an hour or two hours’ drive or train journey from Edinburgh. Up the east coast, there are renewables developments in Fife, Dundee and Aberdeen. Whether in renewables or low-carbon technologies, there are already industries working in those areas and we would see further opportunities if the green investment bank were located here. There is also the proximity of the Orkney test centre to be considered. All of those are real projects and developments in Scotland that are leading the way.
As well as the links within Scotland between Glasgow and Edinburgh and between Aberdeen and Edinburgh, which would enable that work to take place, there are important links between Edinburgh and the rest of the UK and excellent links between Edinburgh and other parts of the world. So, there would be a value to the UK Government in locating the green investment bank in Edinburgh. Also, the cost of locating it in Edinburgh would be a lot less than the cost of locating it in London, which must be good in terms of value for money. I really hope that the UK Government makes the right decision on the issue.
As Scottish and Southern Energy comments, establishing the green investment bank in Edinburgh would give a level of scrutiny and visibility to the green investment bank that would help it to become the high-performing, delivery-focused institution that it has to be if it is to be successful. If the £3 billion of investment is to be spent wisely, the green investment bank must be able to tap into existing research and development and existing projects. We have the expertise in Edinburgh and across Scotland to make that successful. If the UK is to come out of the recession successfully, the green investment bank will be absolutely critical in building the capacity of our existing industries. That is why Edinburgh is the natural location for it, as Friends of the Earth suggests. I hope that the UK Government will see the massive benefits of that. As Ron Hewitt has put it succinctly, the value for money, the expertise and the greater opportunities for clean energy and the low-carbon sector all make the case for Edinburgh. We have an excellent business case in front of us.
One of the benefits of our being part of the UK is the fact that we can seriously bid for the green investment bank to be in Scotland and potentially be successful. It would be part of a wider global UK economic push for renewables. Let us look for the £3 billion investment to maximise the current private investment in Scotland and make the most of the Scottish Government’s investment in ports and infrastructure. We need this bank in Edinburgh not just for Edinburgh’s sake, but for the sake of the wider Scottish and UK economies.
17:20
I congratulate Marco Biagi on securing the debate and on his speech. Mr Biagi acknowledged, as did Sarah Boyack, the outstanding work that Edinburgh Chamber of Commerce has carried out in leading the Edinburgh green investment bank group. It is right to commend the business case that it produced, in conjunction with Grant Thornton. In producing that good piece of work, it was assisted by contributions and sponsorship from engineers, banks, professional services, utilities, lobby groups and academia. The involvement of all those groups demonstrates Edinburgh’s strength in relation to many of the Government’s criteria.
It is important that we focus on the three broad criteria that are set out on page 26 of the Government’s document “Update on the design of the Green Investment Bank”. The first is “Ability to fulfil the GIB’s mission”, the second is “Ease of access to the talent pool” and the third is “Commercial costs”. The first criterion involves close proximity to the players in the wider green and financial markets. It is clear that Edinburgh scores pretty highly there. With regard to private sector financiers, we are the fourth-largest financial centre in Europe, and Lloyds Banking Group and RBS contributed to the business case as sponsors. This city and this country are strong in banking, asset servicing—as we heard in an announcement last week—asset management, project finance, insurance and private equity. We have everything in Edinburgh with regard to private sector finance.
We are strong in project sponsors, by which the Government means utilities and waste companies. The business case was sponsored by two of the largest utilities in the United Kingdom. We are strong in specialist advisers, and we are strong in one of the other criteria: green thought leadership. Edinburgh, via the Edinburgh Chamber of Commerce, hosted the first ever Scottish low-carbon investment conference, which was an enormous success and gained us plaudits from all over the UK and Europe. Further, although it is based in Glasgow, Scottish Renewables is active in Edinburgh. That hugely impressive industry group can claim to exhibit green thought leadership. We are therefore strong on the ability to fulfil the mission.
We are also strong with regard to the second broad criterion, which is ease of access to the talent pool. We have always had a skilled and well-qualified workforce, and, as the business case points out, 11 universities are within one hour’s drive of the city and there are 87 low-carbon and environmental research centres in central belt universities.
The third criterion—commercial costs, which includes rental costs and the costs of recruiting advisers and employees—has also been touched on. Edinburgh’s rental costs per square foot are around half of those in London, so we are extremely competitive compared with London and most other cities in the UK.
Edinburgh has the critical mass of activity that is required to make an impact with the green investment bank. We are strong in financial services and we are strong in green energy. As others have said, the green investment bank’s identity will be more distinctive if it is located outside London. For all of those reasons, the Scottish Conservatives support the green investment bank being located in Edinburgh.
17:24
I want to widen the debate geographically and in terms of the bank’s role. First, however, I congratulate Marco Biagi on securing this debate and encourage him and the other Edinburgh and Lothians members who have pushed the argument today to continue to make it.
Marco Biagi said that Vince Cable’s civil servants had a default position that everything had to be located on the Thames. I see that Fergus Ewing is to respond to the debate. He and I cheerfully jousted in previous parliamentary sessions on Edinburgh civil servants’ default position about where they wished organisations to be located. That position is no problem for Mr Biagi, who would like all organisations to be in Edinburgh. However, as Sarah Boyack will well remember, several pretty vigorous debates took place about where certain large organisations in Scotland might be located. Believe me, the default position was Edinburgh and not anywhere else. Mr Biagi makes a point about London, but it is equally applicable to how we do such things in this country, too.
The arguments are well made, and members from across the chamber have eloquently described them. Mr McDonald made a fair point about the north-east and Aberdeen. Robert Carr, the president of Edinburgh Chamber of Commerce, which Gavin Brown, Sarah Boyack and others have mentioned, said that if the bank came to Scotland—as I and my party hope—Edinburgh would become
“the renewable energy capital of Europe”.
That would, of course, be news to Aberdeen. I suspect that a fairly lively debate will continue about that—indeed, I stood next to Alex Salmond at a hustings in the recent election campaign when he made rather that point about Aberdeen. However, I hope that Mr McDonald—and, in fairness, others—will reflect on the bank as a prize for Scotland and will put aside all other debates about the competing cases of cities, because the prize is worth winning.
On the wider point, I will reflect on what the bank must do. We can argue on a cross-party basis in the Parliament for the organisation to be based in Scotland but, in a week when Scottish Power has increased energy prices by 19 per cent and when utility prices are at an all-time high—the average cost is £1,162 per annum per household in Scotland—consumers will ask us, no matter who or where we represent, what the bank will mean for them. I suspect that the wider and stronger argument will be about what clean, green power will mean for energy prices that our constituents pay, whether they pay business or household bills. In my part of the world, the argument is about the percentage of household income that is spent on keeping the home warm.
I suspect that the green investment bank will play an enormous role in energy policy in the future. The direct question will be about what energy policy means for consumer prices the length and breadth of Scotland. If truth be told, not too many politicians are answering that question. The remorseless increase in price that we and our constituents face has not yet been answered by the whole green energy movement—by every business from the Scottish and Southern Energys and Scottish Powers of the world right down to the smallest and most innovative new energy businesses that are producing incredible pieces of engineering kit that are being placed around our coasts or in other areas.
Consumers will ask us not only whether we will keep the lights on but how power will be produced and whether prices will reduce or continue their remorseless rise. That fundamental issue for investment policy and energy policy will have to be considered for the future. Our constituents feel the economic pain of ever-rising utility prices. In bringing the green investment bank to Scotland, that is the bigger issue that all of us—no matter what party we are in—will have to confront.
17:29
I congratulate Marco Biagi on securing the debate at this time. I have been involved in the issue from the start of the campaign and I am delighted that it has reached its current stage.
I will take up Tavish Scott’s remarks. I ask members to cast their minds back to a report of 5 October last year on the views of the Office of the Gas and Electricity Markets, which said that £32 billion of new infrastructure was needed in Britain to carry electricity here, there and everywhere. The report said:
“Gas and electricity charges will have to rise by an average of £6 per household a year over the next 10 years”.
We have to recognise that in the past energy was paid for directly through taxation and people did not notice the way in which the infrastructure was built. We are now in an age when private companies build infrastructure and seek finance out in the open. We also have to recognise that the replacement of fossil fuel production with the new energies will have an up-front cost. That is the difficulty from the point of view of dealing with fuel poverty and what people have to pay. The green investment bank is part of the argument about how we can get the job done.
When we took up the case for the green investment bank, we witnessed arguments with the Royal Bank of Scotland, which has made large investments in energy, although mainly in coal, oil and tar sands around the world, rather than in the renewable energies in Scotland—or Britain, for that matter. The argument for the green investment bank was that there had to be a publicly led bank that, working on sound banking principles, was able to ensure that we had sources of cash for renewable energies and could draw in cash from other banks, so that we could have the kind of investment that I am talking about.
Just this week, we have seen news about rebranding and sales in relation to SeaEnergy, which has partners for offshore wind farms in the Moray Firth and off Inch Cape. One of the points made in the recent stories about SeaEnergy’s recent sale is that:
“The sale took a year to secure and came after SeaEnergy said it couldn’t obtain the necessary funding to develop the three-year-old business.”
The point about getting the funding for offshore wind production is obvious: there has to be a source of funding that is sensible and available sooner rather than later.
We have a financial services hub in the centre of Scotland that has built up despite the recession and which has 300-year-old skills behind it. American firms are moving in here at a time when we are in the process of moving out of the recession—asset managers, insurance and other financial services have also been mentioned. We must build on that belief in Edinburgh as a financial hub to ensure that the investments provide a good return and that Scotland and the rest of Britain get a good return on the development of renewable energies.
There is an awful lot to say on this subject. As a north of Scotland member, I am delighted to recognise that we are looking to the green investment bank to provide the bridge towards securing the funds that will help develop the Moray Firth renewables scheme, the Beatrice offshore wind farm, the development at Inch Cape and so on. In the Scottish context, it is vital that the Edinburgh case is made. I hope that it has every success. It has had my support from the start and it has cross-party support. We will go on from here with the Parliament speaking with one voice.
Given that there are two members still to speak in the open debate, to be followed by the minister, and that there is limited allocated time remaining, I invite any member to move a motion without notice, under rule 8.14.3, to extend members’ business by up to 30 minutes.
Motion moved,
That, under Rule 8.14.3, the debate be extended by up to 30 minutes.—[Sarah Boyack.]
Motion agreed to.
17:33
I congratulate Marco Biagi on securing this important debate. I apologise to him and the minister for leaving soon; I am chairing a meeting of the cross-party group on cancer, which was supposed to start four minutes ago.
Like Marco Biagi, I will “shamelessly plagiarise” the excellent report by Grant Thornton and the Edinburgh Chamber of Commerce, which is an important report in terms of winning the arguments in London—I imagine that there is not really any need to win the arguments in this chamber.
Before I turn to some points made in the report, I will quote Friends of the Earth, which is always worth quoting on these matters. It stated not only that
“A properly funded Green Investment Bank with real borrowing powers could play a really positive proactive role in speeding transition to a low carbon future”,
but that locating the bank in Edinburgh will serve to
“exploit an impressive concentration of skills and expertise in clean energy and finance.”
In a way, that sums up the whole case, but it is clear that the matter has to be gone into in more detail.
The case for locating the UK green investment bank in Edinburgh centres on the city’s unique position in the development of the clean energy and renewables sector combined with the fact that it is ranked as the fourth largest financial centre in Europe. I am sure that we all agree that it is essential that we succeed in commercialising the sector in order to deliver on our climate change objectives, and Edinburgh is ideally placed to advance an effective collaboration between industry and finance.
I would like to highlight some of the arguments that are made in the report. It says:
“Edinburgh is the only location in the UK which can bring finance and the clean energy industry together in a single location.”
The industrial hinterland of the area, in oil and gas as well as clean energy, supplies an unrivalled source of experience and skill, which may be harnessed in support of effective commercialisation. It may be surprising to some people that oil and gas are mentioned in the report, but many skills from the oil and gas industries can be transferred to renewable energy. All the offshore sources of renewable energy illustrate that most obviously.
A location outside London will also provide all the benefits of achieving the geographical spread of a successful clean energy sector across the UK while maintaining the benefits of integration with a flourishing financial sector. We should remember that the financial services that are provided in Edinburgh are essential in assessing risk and dealing with high-return investment and commoditised asset lending. Such intelligence will be indispensable in facilitating a safe route to commercialisation. That is further supported by the fact that Edinburgh has world-leading academic and research centres and, in particular, courses that are supplied by educational institutions. Those resources effectively provide a base of expertise specifically suited to the needs of the green investment bank.
Edinburgh is, of course, already the location of a large number of businesses that are involved in the low-carbon sector. However, we should remember that it is not just about Edinburgh; it is about the super-region across a large part of Scotland of clean energy activity. Others have mentioned Glasgow and other locations. As the MSP for Edinburgh Northern and Leith, I should, of course, refer to Edinburgh and Leith, as we are looking to Leith for many of the developments in renewable energy in the next few years. In particular, Scottish Enterprise has identified the docks as a very suitable location for the development of wind turbine technology.
As I have only 20 seconds left, it would be remiss of me not to mention the application for a biomass plant at Leith docks, which I know the minister cannot comment on. That is not what we in Leith mean by positive green renewable energy. I am sure that I will be able to put the case against that in other debates and discussions.
Let us support genuinely green and renewable energy and a green investment bank in Edinburgh to promote it.
17:38
Strong cross-party support for Edinburgh as the home for the green investment bank is a very positive development, and Marco Biagi deserves our thanks for bringing the debate to the Parliament.
Scotland has the most extraordinary renewables potential, especially for wind, wave and tidal power. We are a nation of serial innovators and we know what the opportunities of an energy bonanza feel like. Similarly, despite a difficult few years, Edinburgh has particular expertise in developing financial markets. The real talent that will be needed will be readily available here, and readily committed to Scotland’s future as a home and funder for low-carbon technologies.
We want to see Edinburgh win the battle, but we have a couple of concerns about the institution itself. Will it be a proper bank that invests in green technology? Will it have the key strengths of a real bank and be able to borrow and lend, or will it be just another grant-giving body? Without proper financial powers, the money will not come back, ready to be lent out again.
The greenness is also in question. In January, my colleague at Westminster, Caroline Lucas, asked Vince Cable whether he could guarantee that the bank would not be used to fund the new wave of nuclear power stations that has been backed by both the current UK Administration and its predecessors. He was unable to do so, and said:
“in the very long run we are not ruling out particular possibilities, including nuclear. It is not part of the bank’s immediate planning, however.”—[Official Report, House of Commons, 24 May 2011; Vol 528, c 794.]
I am grateful to hear that, but that approach would be an absurdity, especially given the clear majority in this chamber against the dead end that nuclear power represents. A green investment bank needs to help us to prepare for the post-nuclear era, just as we must prepare for the post-oil era. As Rob Gibson touched on, it would be equally absurd if, in the name of low-carbon energy, the green investment bank were to pour its money—which is to say our money—into unconventional fossil fuel extraction, such as shale gas and deepwater oil drilling, on the pretext that the speculative technology of carbon capture and storage might one day get off the drawing board.
Successive UK Governments have form on the issue. We, the taxpayers, own a substantial slice of the banking industry, yet UK ministers have yet to require those banks to operate on a greener basis, for example, by forcing the Royal Bank of Scotland to ditch dirty projects such as tar sands extraction in favour of projects that are of genuine public benefit. If the UK Government had sufficient political will on the issue, just think what a powerful institution RBS could become if we turned it into a green investment bank, with access to the new Government funds as well as its already vast lending and investment portfolio.
My concerns are genuine and I hope that the Scottish Government shares them. I ask the minister to open discussions on them with UK counterparts and to keep the Parliament informed of progress.
17:41
I warmly congratulate Marco Biagi on the motion, which is on what must be one of the most important matters that we have debated in the Parliament. I welcome the support from all the parties on the green investment bank. As Sarah Boyack rightly pointed out, all parties in Scotland have joined together to support the campaign for the GIB to come to Edinburgh, for all the reasons that Marco Biagi set out so eloquently in his opening remarks. We do not often hear the word “trillion” in the Scottish Parliament, but the potential to benefit Scotland in the future is absolutely massive. The bank has the potential to deliver substantial benefit to the green economy in Scotland, especially when it gains full borrowing powers, which might not be for some time yet. The bank needs to operate flexibly and to leverage investment from the private sector.
Scotland has key credentials. In particular, Edinburgh has twin criteria that render it the best place for the GIB: a distinguished history in banking and a growing reputation as an innovative and high-quality hub for financial services, as well as a leading place in the low-carbon economy development. In relation to banking and renewable energy, Edinburgh is the best and right place for the green investment bank.
Malcolm Chisholm was right to point out the significant achievements by academe, if I can put it that way. Last night, I attended a dinner at the Heriot-Watt University campus, where the principal and colleagues are seeking to establish a campus furth of Scotland, in Malaysia. Heriot-Watt has considerable expertise in renewable energy and it has a presence in Orkney, where the European Marine Energy Centre is taking a lead, and which I hope to visit next month.
In all those respects, and in other respects that members have mentioned, Edinburgh has outstanding credentials to be the location for the green investment bank. I believe that a case exists on merit and not on special geographical or national pleading. In a speech that Vince Cable made—I believe, in April—he described Edinburgh as a front-runner. The task for the Scottish Government now is to see Edinburgh become the front-runner and the choice.
The GIB would help to provide the capital that we need to realise the renewable energy revolution in this country. That will not be easy in many respects, but a public sector banking finance element is plainly necessary, without a shadow of doubt. The scale of the capital that is needed to develop offshore, carbon capture and marine technologies is substantial indeed, but there must—and will—be a role for the public sector to play. That is accepted by everyone, which is good.
The public sector would play a role in first-loss debts, the construction phase, equity co-investment, pari passu senior debt, up-front refinancing commitments and subordinated debt during the operational phase. Those technical terms all describe different ways in which public sector finance will be necessary in order for projects to become a reality. That is why the GIB’s role will be crucial, and why—as Gavin Brown pointed out—utility companies such as SSE have supported Edinburgh Chamber of Commerce’s campaign, which, as many members have said, has been very well presented. ECC is to be congratulated on its efforts, and on holding its Scottish low-carbon investment conference once again this year, on 27 and 28 September, following the inaugural event last year—to which Gavin Brown referred—which was attended by 550 international delegates.
SSE has pointed out other arguments that may not have been made tonight, and I will run through them now. First, any new financial services organisation seeking to establish itself in London would struggle to make an impact because of the sheer size of the sector there. SSE makes a very good point: there is a real risk that GIB would get lost in London because there are so many massive institutions there. Its presence would not be felt so strongly and it would not be seen as being so significant. In Edinburgh, that will most certainly not be the case: the GIB will be seen as a key institution serving a determined key national objective.
Secondly, the selection of Edinburgh is entirely consistent with UK policy on the principles of establishing new institutions, in that such institutions should create business opportunities that are spread more evenly across the UK and between industries. Lastly, if the green investment bank is located in Edinburgh, its activities will—because of the interest from all parties in the chamber, which we have seen tonight—be more visible, and there will be greater scrutiny of those activities.
I think Alison Johnstone would agree that we need to keep an eye on the role of the GIB to see that it performs its purpose, and not other purposes to which she alluded.
I think that we all agree on this matter tonight, and I am delighted to bring such consensus to the chamber, which as minister I always seek to do. I congratulate Marco Biagi again, and I thank all the members who have made such excellent contributions to the debate this evening. It is truly an example of all parties coming together as team Scotland—of all of us pulling on the blue Scotland jersey to support the green investment bank.
Meeting closed at 17:48.