In September, I wrote about the need for local state-backed commercial banks, to help revitalise our regions. Now, it appears that the Strathclyde local government pension fund is going to do something very similar.
To be fair, it’s not quite a bank in the traditional sense, but rather an investment fund which local businesses can access, worth £100million. But it is also being used to drive the city council’s social and economic policies, with businesses using the fund having to commit to creating new jobs, and paying Glasgow’s Living wage of £7.20 an hour.
The new fund will be used to support new and existing firms in the Glasgow and West of Scotland area, although a reasonable return will have to be delivered to pension fund members. Presumably by spreading the risk across a larger number of investments the overall return will be satisfactory.
This is something which all the pension funds, not only across Scotland, but across the UK could consider. My own fund in Tayside is sitting on assets of £1.75billion as at the last report for 2009-10, and it should prove easy for it set up a similar fund for SME’s across Tayside to access to boost employment in the region. If it was to invest £50million in local businesses, it would be less than 3% of their overall assets, yet would have a massive impact on the local economy. Jobs would be created and the local economy put back on its feet. Small businesses would have the capital to grow, and take on more people. Money would be spent in the local economy, creating even more jobs.
Such projects would also break down the “Them and Us” culture which has grown up between the public and private sectors. And that can only be a good thing.