The launch of the Scottish National Investment Bank, which could leverage a total of £3.4 billion funding in its first year, is heavily influenced by research from PhD student Gemma Bone Dodds.
- ESRC-funded PhD student Gemma Bone Dodds, author of the Banking for the Common Good report, worked with partner organisations to circulate the report amongst Members of the Scottish Parliament in order to get banking reform on the political agenda.
- The report was first presented to the Scottish Parliament in March 2016, discussed at a workshop (along with the follow-up report Blueprint for a Scottish National Investment Bank by Laurie MacFarlane) with Scottish Members of Parliament in Westminster in October 2016, and presented to the Scottish Council of Economic Advisors in 2017.
- The SNP, Labour and Scottish Greens all welcomed the report, with the SNP adopting the proposals at their Spring Party Conference in early 2017.
- The research proved the case to the Scottish Government that a national investment bank was needed. Just 18 months after Gemma Bone Dodds proposed the idea, Nicola Sturgeon, First Minister of Scotland announced the creation of the new Scottish National Investment Bank as part of the government's plans for Scotland in 2017-18.
- The UK Labour Party has also recently changed their policy to include the creation of a Scottish banking system very similar to the proposed model.
"The recent decision of the SNP Government – to put the creation of a publicly-owned Scottish National Investment Bank at the heart of its programme – has been heavily influenced by last year's publication of the Banking for the Common Good report. It is not often that the evidence bit of public policymaking proves so effective. In this case, I think the impact is down to the clarity of the report itself." (George Kerevan, former member of the Treasury Select Committee and MSP for East Lothian 2015-17)
About the research
In 2008 Scotland’s Royal Bank of Scotland collapsed, marking the beginning of the financial crisis that cost the UK economy an estimated £7.4 trillion. There were initial calls to reform Scotland's financial system – criticised as being unstable and unfit for purpose – but it remained largely unchanged.
In August 2015 Gemma Bone Dodds, a PhD student at Newcastle University, undertook a three-month ESRC-funded internship at Friends of the Earth Scotland, an organisation campaigning for Scotland's transition to a sustainable green economy. Working with partner organisations such as Common Weal, the New Economics Foundation and Move Your Money, she researched Scotland's current banking landscape and compared it to those in other countries seen to have more sustainable and socially just banking systems, such as Germany. Based on this research and alongside contributors from those organisations she wrote a report called Banking for the Common Good.
The report, published in March 2016, called for a move away from Scotland's current highly concentrated, profit-driven banking system, to an 'ecosystem of institutions structurally designed to work for the common good'. Ms Bone Dodds proposed setting up a publicly funded Scottish National Investment Bank, supported by several not-for-profit regional 'People's Banks' that would invest in local communities and businesses.
National investment banks, seen elsewhere in Europe, such as Germany's Kreditanstalt für Wiederaufbau, the European Investment Bank and the Nordic Investment Bank, allow countries to invest in long-term projects and infrastructure which private banks are unable or unwilling to fund, such as low-carbon initiatives. The report calculates that with just a 6.5% (£225 million) initial investment from the Scottish Government, the new bank could leverage a total of £3.4 billion in its first year.