Scottish Labour leadership candidate Joe Fagan MSP has called for a new Scottish Investment Pledge to take Community Wealth Building national by unlocking billions of pounds of patient capital for Scotland’s homes, energy, ports, infrastructure and local economies.
Scotland’s local government pension funds collectively manage £67 billion in assets on behalf of council workers and former council workers.
Mr Fagan’s proposal, the first major policy proposal of this leadership campaign, is that every fund would be required to publish how much it invests in Scotland, explain how it has considered commercially viable Scottish investment opportunities and report annually on progress.
Each fund would also publish a long-term Scottish Investment Pledge setting out its approach to investing in Scottish businesses, infrastructure and other productive assets.
The proposal would create a clear “comply or explain” system. Funds would be expected to consider suitable Scottish opportunities and explain their approach publicly, but they would remain completely independent in deciding whether an investment was right for their members.
Every decision would continue to be made solely in the interests of pension scheme members and would have to deliver an appropriate commercial return for the level of risk involved.
If funds scaled up Scottish investment to between 5 and 10 per cent of their assets, while only backing quality propositions, the pledge could unlock £3.3 billion to £6.7 billion or more for productive investment across Scotland.
That investment could support housing, ports, energy, infrastructure and other projects without increasing government borrowing, increasing public spending or cutting capital budgets.
Candidate for Scottish Labour Leader Joe Fagan MSP said:”Transforming Scotland’s public services, rebuilding our public sphere and building community wealth only work do things differently.
“That starts by putting the wealth of this country to work for you and your family.
“Scotland does not lack capital. It lacks a system that properly connects Scottish capital with Scottish opportunities.
“Our local government pension funds manage £67 billion. We should be doing everything possible to connect that investment power with Scottish homes, infrastructure, energy projects, ports and growing businesses.
“This is about taking Community Wealth Building national.
“For too long, too much wealth created in Scotland has flowed out of Scotland. I want to see more Scottish capital invested in Scottish communities, supporting Scottish jobs, Scottish businesses and Scottish public services.
“The Scottish Investment Pledge is straightforward.
“Every fund would publish how much it invests in Scotland, explain how it has considered commercially viable Scottish opportunities and report openly on progress.
“Funds would remain completely independent and every decision would continue to be made in the best interests of scheme members.
“This is about protecting pensions by ensuring every investment continues to meet the fund’s financial and risk requirements.
“Where a strong Scottish opportunity exists, it should be properly considered.
“Where it does not meet the fund’s requirements, the fund would simply explain why.
“A move towards 5 to 10 per cent Scottish investment could unlock £3.3 billion to £6.7 billion or more for housing, energy, ports, infrastructure and productive Scottish businesses.
“That would mean billions for Scotland’s future without increasing government borrowing, without increasing public spending and without cutting capital budgets.
“But transparency alone is not enough. The Scottish Government must work with councils, the Scottish National Investment Bank and investors to build a serious pipeline of projects capable of delivering secure, long-term returns.
“This is how we protect workers’ pensions, build local wealth and put more of Scotland’s financial power to work for Scots.”