Press release: UK Market Supports Half A Million Scottish Jobs

More than half a million Scottish jobs – around one in four – depend on Scotland’s trade with the rest of the UK, new research published today reveals. That is more than four times as many jobs supported by EU trade.

The figures from the Fraser of Allander Institute show:

around 530,000 jobs in Scotland (nearly one in four of all jobs) are supported by demand for Scottish goods and services from the rest of the UK;
more than 175,000 jobs in Scotland are supported by export demand from the rest of the world; and
around 125,000 jobs in Scotland supported by export demand from the rest of the EU.

Secretary of State for Scotland David Mundell said:

More than half a million Scottish jobs depend on being able to trade freely within the UK. These figures demonstrate clearly the value of the UK market to Scottish businesses – which is worth four times that of the EU market. As we leave the EU, it is vital we maintain the integrity of the UK market and prevent any new barriers to doing business across the UK.

We have seen recent worrying figures showing the Scottish economy contracting, compared to the UK economy growing overall. So, at this time, it is more important than ever that Scotland’s two governments work together for the benefit of people in Scotland. That is what people in Scotland expect, and to what I am committed.

The UK Government is working closely with the Scottish Government to help boost the Scottish economy. That includes our new industrial strategy, UK City Deals and a £1.2 billion funding boost for Scotland.

Around two thirds of Scottish jobs supported by exports to the rest of the UK are in the services sector (more than 328,000 jobs), and just under one third are in manufacturing and construction (more than 150,000 jobs).

The new research confirms the importance of Scotland’s trade with the rest of the UK, the value of which is worth four times that of the country’s exports to the EU. Scotland sells goods and services worth £49.8 billion to the rest of the UK, and £12.3 billion to the EU. Today’s figures show that more than four times as many Scottish jobs are supported by UK trade compared to EU trade.

The research, ‘Employment supported by Scottish Export Demand’, commissioned by the UK Government, is available from the Fraser of Allander Institute.

The Scottish Government paper, Export Statistics Scotland, published earlier this year shows the value of Scottish exports.

The latest Scottish GDP figures, published by the Scottish Government earlier this month, showed that the output of the Scottish economy contracted by 0.2 per cent during the latest quarter.

The UK Government’s Industrial Strategy was published earlier this year and sets out how we are building an industrial strategy to deliver a high-skilled, competitive economy that benefits people throughout the UK.

Statement to Parliament: Sale of Green Investment Bank

The government is announcing today the sale of the UK Green Investment Bank plc (GIB) to Macquarie Group Limited (Macquarie), with a £2.3 billion deal which secures a profit on the government’s investment in the bank, provides value for taxpayers and ensures GIB continues its green mission, in the private sector.

GIB has been a real success story since it was created in 2012 – the world’s first dedicated green investment bank, established to accelerate private sector investment into the UK green economy. It has fulfilled that mission, supporting almost 100 green infrastructure projects in the UK so far, and attracting £3 of third party funding for every £1 it invests. It has shown, as it set out to do, that green investment can be both green and profitable. Having demonstrated its success, the government decided to move GIB into the private sector where it can continue its success on an even greater scale.

The deal, secured through a competitive process as set out in a report to Parliament on 3 March 2016, will meet the objectives outlined by government of securing value for money for the taxpayer while ensuring GIB continues its green mission, free from the constraints of public sector ownership. It has the backing of GIB’s independent board.

Under the ownership of Macquarie, one of the largest infrastructure investors in the world, GIB will invest more into the green economy than ever before, with £3 billion of new investment targeted over the next 3 years, exceeding GIB’s track record of committing £3.4 billion of investment over the 4 and a half years since it was founded. GIB will become the primary vehicle for Macquarie’s renewable energy investment in the UK and Europe, allowing GIB to expand internationally.

Macquarie has today published a series of commitments over the future of GIB under their ownership, including that GIB’s green purpose and green objectives will be maintained. This is in line with the ‘special share’ in GIB to safeguard GIB’s green purposes, which will be held by 5 independent trustees who will have the power to approve or reject any proposed change to GIB’s green mission.

Macquarie has also committed to continue GIB’s investment approach, targeting investments across all areas of the green economy and across all stages of the project lifecycle, including the critical phases of development and construction. This will ensure GIB remains a specialist green investor supporting renewable energy investment and emissions reduction in the UK.

Macquarie is committed to maintain the GIB platform and brand, and to utilise the skills and experience of GIB employees in Edinburgh and London. GIB’s Edinburgh office will be home to a new revenue generating project delivery business providing services to the green energy portfolios of GIB and Macquarie in the UK.

The transaction value of around £2.3 billion ensures that on completion, all taxpayer funding invested in GIB has been returned with a substantial profit. This comprises proceeds from the sale of around £1.7 billion, with a further £0.6 billion of GIB’s current outstanding commitments which will be met by Macquarie and its partners, rather than by taxpayers.

As part of the transaction, a number of GIB’s offshore wind assets will be moved into a new offshore wind investment vehicle, which GIB will manage and hold a 25% stake. Investors in this investment vehicle will be long-term institutional investors Macquarie European Infrastructure Fund 5 (MEIF5) and the Universities Superannuation Scheme (USS). This type of transaction structure matches GIB’s existing approach to asset ownership, providing a mechanism for long-term institutional investors to invest in low carbon projects while ensuring GIB can recycle its capital into new green investments.

The government will continue to hold a £130 million portfolio of a small number of GIB’s existing investments. This portfolio will continue to be managed by GIB until these investments can be sold on in a way which returns best value for taxpayers’ money.

The government would like to put on record its gratitude to GIB management and staff, who have all played a key role in GIB’s success, and who have worked tirelessly and professionally to support the sale process while continuing to source and finance green projects across the UK.

The sale proceeds will be received on completion of the transaction, which is expected to take around 2 months. The transaction is conditional on certain regulatory approvals including EU merger clearance. Under the Enterprise Act 2016, government is required to provide a full report to Parliament on completion of the transaction.