Scotland's 'business-friendly’ push could set fire to net-zero targets

Alongside the FM, the new panel will be co-chaired by Angus Macpherson, chief executive of Noble & Company. The company was founded by the late Sir Iain Noble, an SNP funder and stalwart advocate of the Gaelic language. These days the firm specialises in providing big companies with “creative advice” (their phrase) on mergers, acquisitions, fundraising, and restructuring. The company is especially involved in the whisky industry.

One could not get closer to corporate Scotland or, indeed, global finance. Macpherson himself previously ran the operations in Asia of Merrill, the famed US investment and wealth management group, where he helped privatise the Indonesian telecoms industry. Key players at Noble & Co. include former highflyers at Goldman Sachs, KPMG and BlueCrest (the big hedge fund). Between them, they have an extensive clutch of non-executive directorships and board positions across Scottish and UK business.

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Other members of the new investment panel include Andrew Telfer, joint senior partner at Baillie Gifford, the Edinburgh-based investment fund that was an early (and big) investor in US tech stocks. Of course, the latter have absolutely dived this year. Then there is Alexandra Basirov, who fronted BNP Paribas’s green advisory arm but recently quit to join Bank of America (BoA). In July, US regulators fined BoA $225 million for “deception” in its debit card accounts. BoA now wants to present a new “green” face to the world – hence the hiring of Basirov.

Next is Gavin Templeton, formerly of BP (yes, the oil company), Morgan Stanley (US investment house), Rabobank (fined $1 billion for “unscrupulous trading practices”), and VBT (a Russian investment bank now sanctioned). Then there is Shane Corstorphine, who was with RBS in the bad old days of Fred the Shred, then with the Edinburgh travel webservice Skyscanner. Unaccountably, Corstorphine’s LinkedIn page fails to mention that Skyscanner was sold to the Chinese in 2016, crushing hopes of creating a Scottish high-tech player. Finally, there is Baroness Margaret Ford, who has sat on the board of many companies, including Serco, and is currently with Deloitte, the audit group, which has been repeatedly fined for poor auditing practices.

Let’s remember that incompetence, greed and excess risk-taking by banks took the world to the brink of economic collapse in 2008. And only this year, British pension funds came close to insolvency when interest rates rose sharply, because they had indulged in highly questionable operations involving derivatives.

However, these near-death experiences raise the obvious question: if you want to encourage green investment in Scotland, and if you are serious about achieving a net-zero target, then is it sensible to rely only on the advice of folk from an industry with such a record of getting it absolutely wrong? Would it not be better to at least leaven the panel of experts with folk who know something about, say, renewables engineering? Or, God forbid, trades unionists from the sector, who know how things run on the ground. And what about people from the companies that actually manufacture the necessary infrastructure. Or even academics who might have a view on what technology might work?

OF course, it is easy to see what the FM wants to achieve. She wants to position the Scottish Government as business friendly, especially if there is going to be another independence referendum soon, especially a “de facto” one hitched to a UK general election. And what better way than to appoint groups of friendly (or not so friendly) business folk and financiers to blue ribbon panels where they get to look civic minded and bask in media attention, all without risking a dime. For financiers and bankers especially, it is a chance to improve the appalling public image of their industry.

The FM has a track record here. She has already appointed numerous advisory panels from the business community. For instance, she appointed ex-Tesco Bank boss Benny Higgins to chair an advisory group on post-Covid economic recovery. Last year, the FM created a new advisory group to come up with blue-sky thinking on the future of the economy. This group included Sir Nick Macpherson, the former Treasury boss who managed the fight inside Whitehall against a Yes vote in 2014, and now sits on the boards of a clutch of financial firms.

You can call this a brave and inclusive tactic, that shows the Scottish Government under Nicola Sturgeon is open to dialogue with business. And there is much to be gained from keeping your enemies closer than your friends, even if that includes Nick MacPherson. But there are also costs to such a manoeuvre.

First, it risks capture by vested interests of the Scottish Government’s political agenda. To prevent this, it is necessary to ensure that such panels always have a wide range of representation, including trades unions and local authorities. Second, there is a perception that the FM is happy to appoint such expert groups as a form of political window dressing. I doubt Nicola Sturgeon is as cynical as that, but (for instance) many of the proposals from the Higgins committee were instantly binned. These included one recommending more Scottish Government share holdings in strategic sectors, particularly in green industries.

I have a specific worry about the composition of the new green investment panel. The FM’s covering statement specifically says that the panel’s job is to help make Scotland “attractive” to foreign investors. Foreign investment is always useful both in cash terms and in importing new technology. But not at the cost of handing over the national economy to foreign control. And that is exactly what is happening to Scotland. Huge swathes of the economy are now foreign-owned, including whisky and food production, retailing, banking and energy. This has occurred in the space of the last two decades.

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Much of this shift has been welcomed – indeed promoted – by the SNP government. Again, I can see the game plan. Without independence, ScotGov is deeply constrained in what it can do to promote internal capital investment. But it does have the ability to persuade foreign capital to come here. However, we are gently ceding more control to outside interests. Expect the new investment panel – whose members are weighted towards Asian investors – to reinforce that dynamic.

The alternative lies in having economic sovereignty. An independent Scottish state can use that economic sovereignty to prioritise domestic investment in the sectors we want, not sectors chosen by international finance.

We can set tax and interest rates at levels that encourage a shift from consumption towards investment, raising productivity. We don’t need more dubious advice from investment bankers, we need independence.