Scottish National Investment Bank

We fully and enthusiastically support the core purposes of the SNIB: especially of providing patient capital to mission-led undertakings. The Scottish economy will be a lot less efficient, competitive and productive if this does not happen.

However, we believe the Consultation Paper lacks a rigorous analysis of the gaps in the investment market, with a resulting lack of clarity and potential confusion about the exact objectives and purposes of the Bank; what the Bank’s potential contribution to sustainable economic growth could or should look like; and therefore what ‘success’ for the Bank looks like.

The current gaps in the investment market relate to four separate (but often overlapping) issues. We believe the Bank should focus most of its effort on addressing these four market gaps, with consequent implications for its objectives as laid out in Paragraph 2.4

The four critical market gaps are the following:

1. Cherry orchards versus cherry picking: the role of patient capital. Some undertakings may be highly profitable in the long-term but take a long time getting there. It may take a decade or more to plant and tend the trees in a cherry orchard so that they reach maturity, after which the profitable activities of cherry picking can begin. For example, it took over a decade for Amazon to build the e-commerce and logistics infrastructure, cost and customer service models and customer base to become the force it is today. Every step of the way before this it is was slammed by investment analysts for not being ‘profitable’ (when it was investing in growth).

The need for truly patient capital is especially strong in the case of infrastructure projects and mission-led investments which require fundamental technology innovations and/or structural, business-model and behaviour. Traditional sources of funding in the private sector tend to look for much shorter payback timescales and with lower risk than such transformational ventures offer: they tend to want to invest in the cherry picking after the hard work of nurturing the cherry orchard is complete.

2. Locust or bee? Enterprises with ‘low’ rates of enterprise return but high economic contribution. Every undertaking creates spill-over effects or externalities: e.g. the factory that pollutes the air and rivers (negative externalities) and the factory that becomes the magnet around which an entire community where multiple other parties are enriched by its presence (positive externalities).

To exaggerate to make a point (drawing on Geoff Mulgan’s analysis in his book The Locust and The Bee), there is a big difference between an undertaking adopting ‘a locust’ strategy of maximising profits at the expense of those around it and a ‘bee’ strategy, where the undertaking flourishes by ‘pollinatingpollenating’ other enterprises so that they also flourish.

If SNIB’s prime purpose is to promote sustainable economic growth, it cannot judge the ‘investablity’ of an enterprise solely and narrowly by that enterprise’s own profitability in isolation, without regard to the externalities it generates. Some enterprises may generate ‘low’ returns on capital at an enterprise accounting level while, at the same time, greatly improving the returns of the enterprises they deal with and/or opening up opportunities for innovation-led growth, thereby improving the performance of the economy as a whole. The main economic contribution of road, rail, water and electricity providers is not the profits they make as enterprises, but the degree to which they enable the rest of the country undertake mulitple other activities quickly, easily and cheaply.

Mydex CIC is a case in point. As a Community Interest Company, legally obliged to reinvest two thirds of any profits it makes into promoting its social mission, we can never provide the ‘commercial’ rates of return required by most private sector investors. But that is not our purpose. Our purpose is not to maximise our own profits but to maximise the positive externalities we generate (while covering our costs and making ‘enough’ rather than maximum profit). Mydex generates its positive externalities by reducing the friction, cost, effort and risk of collecting and using personal data, helping all parties (including individuals and service providers) use this data to reduce their costs, while also increasing the amounts of (and quality of) data that can be shared to generate added value.

Private sector investors seeking to maximise their returns do not want to invest in undertakings that maximise positive externalities. They want maximise their own profits. But ‘bee’ undertakings with lower-than-market rates of return may make a bigger overall economic contribution than narrow profit maximisers. Many mission-led enterprises, whose prime purpose is to generate transformations that reach beyond the profit and loss account of that particular enterprise, will fall into this category.

Scotland needs a Bank that recognises the need to fill this gap, with performance metrics that capture not just the enterprise’s financial performance but its contribution to economic growth overall. Any set of performance metrics/targets that focuses only on the profitability an enterprise in isolation, regardless of its broader social/economic impact is essentially myopic and may result in a failure to make investments which have significant wealth-creating potential. Worse, the existence of such myopic targets may distort the decision-making both of the Bank and the undertakings its invests in, away from the biggest possible positive social and economic impact.

3. Latent markets (where ‘dogs aren’t barking’) A starving family that is poverty-stricken and does not have the money to buy food does not represent ‘a market’ for food. Without the money to signal demand, the market fails to materialise: the dog never barks.

Markets fail to materialise if critical inputs are not available and/or their cost structures are such that the price of their outputs lies beyond the reach of the people wanting to buy them. New markets can materialise - often apparently miraculously ‘from thin air’ - when transformational strategic investments enable the provision of critical inputs and/or revolutionise their cost structures - thereby waking the dog up and getting it barking.

At first sight, situations where people cannot afford to buy the outputs of an enterprise or industry may seem to be beyond the remit of a National Investment Bank; more a job for charities or state subsidies. But there are many highly commercial instances of dogs starting to bark. When Henry Ford’s moving assembly line reduced the cost of making a motor car by 90%, he created a mass market for cars (which, in turn, spawned an entire ecosystem of knock-on economic activities). Before Google, ‘search’ was not an everyday activity: it took too much time and effort for people to do it. Nobody before Google could have predicted that search would spawn a market worth over $50bn.

As both Ford and Google showed, when the right investments awaken non-barking dogs, the returns can be stratospheric. In fact, many of the biggest economic transformations occur when strategic investments wake up such non-barking dogs.

For example, the energy market and the economy as a whole would be utterly transformed if new technologies helped climate-saving clean technologies reach a price advantage over fossil fuels. Likewise, in Mydex’s experience, a vast range of value-creating data-driven services are not currently being produced because critical inputs such as Verified Attributes are not being made available at low cost, and because the costs of collecting and sharing personal data in ways that comply with data protection regulations remain prohibitive. Like cleantech, personal data is another potentially transformational non-barking dog.

In some cases, visionary private sector investors see and seize non-barking dog opportunities. But not always. Too often the scale, complexity and risk of such undertakings (along with the difficulty of ensuring they capture much of the benefit for themselves) put would-be investors off, even if the bigger social/economic the prize is huge.

There is therefore a strong case for the SNIB to actively seek out transformational ‘dog waking’ investments like those described above. This fits perfectly with the mission-oriented approach.

4. Non-financial policy priorities Not all Government policy priorities necessary create markets that private investors can profit from. Nevertheless, these policy priorities may still need economic activities to support their delivery. This creates a fourth investment gap.

The SNIB should be free to invest in enterprises that help Government achieve such non-financial policy priorities, if the investment reduces the cost of achieving a goal that would have to be paid for anyway. For example, if it is a Government priority to address the needs of an ageing population but the costs of doing so remains high, it would be valid and beneficial for the SNIB to invest in undertakings that address this problem in ways that reduce the cost of achieving the objective.

Such undertakings would find it hard to attract private sector funding because they may not be highly profitable in their own right. Nevertheless, if they help deliver the desired outcomes at lower cost, they are still making a valuable economic (and social) contribution.

Discussion

The above analysis of current gaps in the investment market point to a range of different investment, risk and return profiles which require different investment criteria:
• ‘Cherry orchard’ investments may offer high returns but only after long gestation periods
• ‘Bee’ investments may offer only low returns compared to ‘the market rate’, but may deliver broader economic benefits that still make them highly worthwhile
• Investments that ‘waken non-barking dogs’ may deliver stratospheric returns, though the risks and obstacles such ventures face may be very high
• Non-financial policy priority investments may not deliver competitive returns but may still make an important economic contribution by reducing the cost of achieving a goal that would have to be paid for anyway.

These categories are not mutually exclusive: there will be many overlaps. Some investments may display some or all of the four characteristics. (Indeed, the above analysis could be used by the Bank develop a checklist that helps prioritise investments: if an investment ticks all four of the above boxes (as we think Mydex does), perhaps it has got a stronger case for SNIB investment than an undertaking that ticks just one.)

If the Bank or Government attempts to apply crude, criteria (such as ‘rate of return’ in isolation to other considerations) in a blanket way across all investments it is likely to result in the wrong decisions, as each investment addressing one of the four market gaps identified above has different needs.

Bearing this in mind, we have concerns about the Bank objectives as outlined in Paragraph 2.4, particularly the objective that it should be ‘commercial’ - a word that is used many times in the Paper but which is never clearly defined.

What exactly does “operating on a commercial basis at all stages of the investment life-cycle” (2.4) mean? Does it mean achieving rates of return that are similar to those sought by private sector investors within similar time scales? Does it mean achieving rates of return that are similar to those sought by private sector investors but with different time scales? Does it mean having clear criteria for investment, including an expected rate of financial return that takes account of the characteristics of the four market gaps being addressed, and being disciplined about assessing eligibility within these criteria?

And how does the requirement to be ‘commercial’ relate to other, potentially contradictory requirements e.g. to seek “inclusive” outcomes (3.2) and to, on occasions, “offer a rate of interest which is materially below the private sector commercial rate” (4.18)?. If there is a potential conflict between two objectives (for example, being ‘commercial’ and ‘being mission oriented’’, how should the Bank choose its priorities, using what criteria? Silence on such questions is not helpful and can only sow seeds of potential confusion and conflict for the future.

In our view, given the diverse nature of the four market gaps identified above and the different types of investment they require, it would be most beneficial for the economy as a whole if the Bank constructed a balanced portfolio which contains them all. As a knock-on consequence, the Bank’s performance should be judged not by an abstract target rate of return that has been ‘plucked from the air’ or from comparisons with non-comparable private sector scenarios, but one that reflects the particular mix of investments it is undertaking and their contribution to the Government’s mission-focused, economy building objectives.

In addition we suggest that if the SNIB is to seriously and genuinely address its goals of providing patient capital to mission-led undertakings, it may have to ‘bite the bullet’ and accept that some or many of its investments will generate returns below those expected by the private sector.

Accepting this does not, repeat NOT, imply that in this case the Bank is being ‘non-commercial’; that accepting a lower rate of return is financially or economically irresponsible. As Paragraph 4.18 points out (see below), accepting lower-than-market rates of return to fill the market gaps described above is not the same as subsidising ‘lame ducks’ that channel scarce and precious resources away from more productive outlets.

However, to be ‘commercial’, the Bank will need to adopt a careful, disciplined approach that identifies the core characteristics of investment opportunities it is presented with (e.g. are they ‘cherry orchards’, ‘bees’, ‘non-barking dogs’ or policy priorities, or a combination of all four?), and to create and apply rigorous criteria for investing in these different types of undertaking.

Yes, the Bank should, after a reasonable period of time, operate at a profit, covering its costs and generating new funds for further investment. But the prime measure of success should not be its own financial performance in isolation, but its performance in the context of how successful it is in filling the four market gaps and boosting inclusive economic growth, including tax yield for Scotland.

Further thoughts

In addition to consideration of the above four categories of investment, the Bank needs to explicitly recognise the needs of different types of undertaking: e.g. privately owned, cooperative, CIC etc. These have different needs, pressures and investment requirements. A healthy economy will see a diverse range of such business types and model flourish, and achieving this should be an explicit element of the investment strategy.

Particular attention should be paid to the needs of CICs, which are quintessential mission-led enterprises and which, because of their ‘bee’ characteristics tend not to attract private sector investment and may also struggle to attract social investment (see below).

As part of this, there needs to be improved clarity and endorsement for equity investment as opposed to debt financing. Most small businesses, including social enterprises, need as much cash as they can to invest in growth. Debt financing that involves significant outflows of cash in the midst of the growth/investment period can distort the operations of the enterprise by diverting attention and energy into cash flow management and debt recycling exercises and undermine the actual development of the business.

Mydex CIC strongly endorses the core purposes of the SNIB: of being mission-led, focusing on specific societal challenges, of providing patient capital, of being market-shaping and market-creating, and of “inventing, designing and manufacturing the innovations that will shape the future – not just being a consumer of other people’s ideas”. This is long overdue.

We describe our experience briefly here to explain why we are so supportive of this goal.

Mydex CIC is registered in Scotland and all its current operations are based in Scotland. We are mission-led: our mission is to empower individuals with their own data, so that they can use data for their own benefit and purposes, including making their dealings with organisations that provide services to them more efficient and productive. Mydex is creating a powerful win-win for citizens and service providers by removing large amounts of friction, cost, effort and risk from the data management and data logistics operations that underpin all efficient, effective service delivery, in both the public and private sectors.

In 2018 all Mydex’s current work focuses on helping individuals who are less advantaged and face difficult life challenges to collect, manage and share their data and achieve better outcomes, via a personal data store. Examples include improving the process of debt advice, helping individuals manage cancer treatment journeys, helping individuals tackle energy poverty, enabling information-sharing to improve management and services in social housing.

However, because we are a Community Interest Company, legally required to reinvest two thirds of any profits we make into our core mission, we cannot attract traditional private sector investment. In addition, it is very challenging to raise ‘social investment’.

After many years of trying we have concluded that the current ‘social investment’ sector:
• is extremely risk averse (with nearly 90% of funds invested so far secured against property or signed contracts with visible revenue streams) and not comfortable in supporting innovations with long-term transformational potential.
• is focused almost entirely on loans rather than equity which, for an enterprise needing patient capital, sucks us into an endless cycle of debt-repayments and consequent need for refinancing
• is focused on short term returns (expecting full payback within three to five years). If successful, Mydex could be extremely profitable in the long term. But to get there - to become the infrastructure provider that we are - we need truly patient capital that does not require returns in these short time scales.
• is not really filling the gap that exists between grants (not seeking any returns) and full commercial returns i.e. real returns on investment, but perhaps not as high as could be achieved elsewhere. For example, Big Society Capital - which is the source of almost all the funds in the social investment market - demands a return of 6%-7% on loans made using their funds. We have struggled with either/or mindsets: the assumption that an undertaking either has to be a charity that spends/’loses’ money, or is focused on profit maximisation; the assumption that an enterprise cannot lie somewhere in the middle, making enough profits to cover its costs, ensure its sustainability and independence, and invest in its future without seeking to maximise these profits.
• does not ‘get’ an innovative enabling business like ours. Most social investors are focused on the delivery of frontline services. They do not regard funding a platform that is one-removed from these services, but which enables more efficient effective and efficient delivery of many such services, as fitting their remit.
• makes investment decisions on the basis of KPIs that are highly specific to the particular social impact the investment vehicle is focused on. For example, social investors focused on addressing poverty might have been happy to invest if Mydex only addressed issues relating to poverty, but the fact that it also helps people address illnesses like cancer, makes us ineligible for investment, perhaps because of a fear that one good cause might be cross-subsidising another. As a general capability and enabler, we can not demonstrate the domain-specific KPIs sought by social investors focused on siloed issues (even though we could provide ample evidence for generic performance improvements such as reduced cost, risk, friction and improved user experience) and, through this, improve domain-specific KPI’s.
For these reasons, Mydex has so far been unable to attract any significant investment either from traditional private sector sources or the so-called social investment sector, even though we are providing a much-needed service with significant long-term social and economic benefits. Instead, we have had to rely on investments from a handful of high net worth individuals plus cash generated from day-to-day operations. This has severely constrained our ability to develop, innovate and grow.

Mydex is developing a mission-led innovation which needs patient capital to deliver economy-wide benefits. We know from bitter experience that there is a gap in the market for investments that support such undertakings. That is why we enthusiastically the SNIB concept: a SNIB can fill this gap, and complete the circle.

However, we are concerned by aspects of the Vision of the SNIB. Paragraph 3.2 says this vision is to “Provide finance and act to catalyse private investment to achieve a step change in growth for the Scottish economy by powering innovation and accelerating the move to a low carbon, high-tech, connected, globally competitive and inclusive economy.”

• We are unsure of the meaning of, and have reservations about, the objective “to catalyse private investment”. We agree that one of the main benefits of mission-led investment is that it can spawn multiple opportunities for further innovation which attracts private sector support. This should indeed be a core goal of the Bank.

However, we also see a danger: that the SNIB makes long term investments into mission-led undertakings which become profitable after years of painstaking work - and that these profits are then effectively syphoned off by private sector investors who only move in once the long, hard, risky work has been done; where the State’s investment effectively ends up subsidising faux ‘investors’ that have previously refused to do their job of taking risks to foster wealth creation.

Such a pattern of ‘pioneers come first, then profiteers’ is quite common, as has been identified by Professor Mazzucato and others. The SNIB should have explicit rules designed to avoid this outcome. If the only entity willing to invest in an undertaking in its formative stages is the public sector (because of the risk profile, delayed timing of return, or initially low level of return) then, if this investment pays off, the public sector should receive the full benefits of this investment and not ‘hand over’ the fruits to those who refused to invest in the first place.

• There is a lack of clarity about terms used. For example, Paragraph 3.2 refers to ‘an inclusive economy’. But no definition of ‘inclusive economy’ is provided. ‘Inclusive economy’ is a loose phrase that could be interpreted in many different ways by different people, causing confusion and conflict in future Bank decision-making.

• Paragraph 3.2 is also potentially self-contradictory. It says the Bank should achieve both ‘global competitiveness’ and ‘an inclusive economy’. But are these two goals actually compatible? If there is a potential conflict between the two - if, for example, being ‘globally competitive’ requires compromising on the goal of ‘an inclusive economy’ - how should it choose its priorities, using what criteria? Silence on such questions sows the seeds of future confusion and conflict.

• Paragraph 3.2 is unclear and vague about two key sets of metrics (as is the Paper as a whole): 1) how will the SNIB judge the performance of the entities it invests in? (This takes us back to the tailored investment criteria needed to address the four main gaps in the market.) 2) how will the performance of the SNIB be judged? (This takes us back to the definition of ‘commercial’.)

In relation to this we don’t understand and fear unhelpful confusion in Paragraph 4.18, which reads:
“The Bank could still take a commercial view of an investment, but offer a rate of interest which is materially below the private sector commercial rate as long as the underlying products and investments are state aid compliant. In making such investments, which will yield a lower level of financial return than other options, the Board must also be able to show that the target rate of financial return will continue to be satisfied overall and that its risk profile is not adversely affected.”

When it says “the Board must also be able to show that the target rate of financial return will continue to be satisfied overall” does this mean that the target rate of all investments combined made by the Bank must be satisfied overall, so that the bank itself meets the target rate rather than the individual undertaking? If so, does this mean that other investments will need to earn rates of return that exceed the target, so that they balance out the rate that is ‘materially below the private sector commercial rate’? If so, why wouldn’t commercial players be investing in these ‘super-return’ enterprises? And wouldn’t the SNIB then be crowding private sector investment out - which it is not supposed to do?

Our confusion is deepened by the first sentence of Paragraph 4.9:
“The target rate of financial return for the Bank’s overall investment portfolio,
included in the Performance and Reporting Framework, will need to exceed the Bank’s expected rate of return on its investments, and incentivise the Bank’s sustained investment performance.”

We do not understand what this means. Is it saying that the target rate should be set, knowingly, at an unrealistic level (i.e. in excess of what it actually expects)? While this may presented as some sort of ‘stretch discipline’, it could a) deliberately bring a level of dishonesty into the Bank’s planning and reporting processes and b) influence the Bank to not invest in the sort of undertakings referred to in Paragraph 4.18 - those requiring rates of return ‘materially below the private sector commercial rate’, thereby potentially diverting it from its core purpose of broader economic benefit (versus Bank financial performance measured in isolation to its broader economic impact).

We agree that the overall direction for the Bank should be set by Ministers through a Strategic Framework, including the setting of missions and performance. But given the above, we have concerns about the phrase ‘target rate of financial return’, which raises the question: is ‘rate of return’ the only KPI by which the Bank’s performance should be measured? What about its broader social and economic impact?

It is possible to imagine four basic outcomes of SNIB investments:
a. High rates of return and strongly positive social and economic benefits
b. Lower than ‘market’ rates of return but strongly positive social and economic benefits
c. High rates of return and negative or neutral social and economic benefits
d. Low rates of return and negative or neutral social and economic benefits

Both outcomes c) and d) are undesirable and must be avoided, and the above analysis of market gaps suggests that outcome a) is unlikely. This means outcome b) is the most likely and the most realistic/practical one to pursue.

The question then arises, how much lower than ‘market rate’ is acceptable? We suggest ministers should take account of:
• The specific nature of missions that are being set and the nature of the Bank’s target portfolio. Undertakings addressing the four different market gaps (above) display different risk/return profiles. If the Ministers’ priorities skew the Bank’s investments to one market gap versus another, the target rate of return should be adjusted accordingly. This should be a matter for constant review.
• In setting the target rate of return, Ministers should also be cognisant of the systemic flow of funds generated by the Bank across the economy as a whole, and not just its own narrow, enterprise accounting returns. In particular, if (say) 50% of the funds invested by the Bank generate tax income for the Government in the form of income tax, VAT, national insurance payments, corporation tax etc, then Ministers may be able to set a rate of return which is half ‘the market rate’ but which may still be ‘profitable’ for the Government, even it is not as profitable for the Bank itself.
• If SNIB gets its investment strategy right it may reduce the burden of grant making in Scotland, plugging the current gap that exists between grants and today’s social finance markets.

Ministers need to have access to external input from people on the front line doing the work to inform the decisions they make. The data they base their decisions on should form part of the open government initiative.

Before it is established, the Bank should have a public consultation to gather views and evidence about which missions it should choose and prioritise.

We think there is an important omission in the current list. There is an urgent need to build a safe, efficient personal information logistics infrastructure for the sharing and use of personal data in ways that are fully compliant with data protection regulations, build trust and benefit all stakeholders, including individuals and society as well as companies.

This is a classic mission oriented, problem-specific societal challenge that embraces multiple industry sectors.

The critical determining attribute and characteristic of data is that it is a resource that can be collected once and used many times, without getting ‘used up’. But the opportunities created by this are not being realised because of a series of structural, process and ecosystem flaws and issues.
Structural issues
1. Data is most valuable when it can be combined and recombined to generate new insights and/or deliver new services. But currently almost all personal data is:
• held ‘under lock and key’ by the large corporates that collected this data (who regard it as a strategic asset that must be guarded jealously). Currently, the full potential use of personal data is massively constrained by the fact that most personal data is held in these corporate silos, so that other parties (including the individuals whose data it is) cannot access or use this data. (The UK Treasury has identified this as a key issue in its recent discussion paper on The Economic Value of Data.)
• dispersed and fragmented, with each organisation collecting and holding just a small/narrow sliver of data about each individual. For innovation to flourish these organisation-confined fragments need to be combined and recombined independently of the organisations’ activities and priorities.
2. Other parties, including the individuals whose data it is, cannot access or use this data. This means data is currently only being used for the purposes set by current data controllers, and not for the many other purposes it could be used for. This is a structural, strategic block on innovation.
3. The organisation-centric approach to data collection has created large centralised databases which have become honeypots for hackers. Data breaches are, in turn, eroding trust in the system.

Process issues
The costs of accessing and using data are unnecessarily and often prohibitively high for a number of reasons.
• Many data-driven and data-based processes remain manual because users do not trust the quality/provenance of the data and because standardised, automated processes for sharing (e.g. APIs) and use (e.g.API fed apps) have not yet been developed.
• Regulatory requirements are exacerbating costs (turning each individual transaction and relationship into a ‘hard border’ requiring a new negotiation), and restricting access (because permissions cannot be obtained).
• There is massive duplication of effort, as thousands of organisations reinvent the wheel every day (for example, checking the identity or address of the same individual).

The net result of the above two (high processing costs and lack of access to data) is that most data-enabled services and activities in both the public and private sectors deliver less-than-ideal outcomes at too high a cost, while many more services that could be offered never see the light of day.

Ecosystem issues
The way our data ecoystem has evolved has, in addition, created:
• New and largely unaccountable concentrations of data power and wealth
• A crisis in trust as the public increasingly feel the collection and use of their data is not safe and that they are being taken advantage by other entities they have no control or influence over.
• A block on innovation: entire sectors of potential data use not being opened up, especially PIMS

We need a new data logistics infrastructure to address these issues, and that requires mission-led innovation. Good answers are already available, e.g. empowering citizens by providing every one with a personal data store, populating these personal data stores via implementation of GDPR data portability principles, and establishing safe efficient data sharing processes enabled by safe-by-default terms and conditions and automated data sharing mechanisms (e.g. APIs). This is the infrastructure that Mydex is currently helping to build).

Currently, however, Scotland’s ability to provide this social and economic breakthrough is falling foul of the four market gaps described above. We need investment that is:
• Plants cherry orchards, not obsess with cherry picking. It will take a decade or more to build out a new personal data logistics infrastructure, based on providing every citizen with their own safe, secure, bona-fide personal data store, where individuals can gather, store, manage, use and share their own data for their own purposes, independently of their relationships with any particular service provider.
• Adopts a ‘Bee’ approach. The economic contribution of such an enabling infrastructure is to reduce the costs of all parties (including individuals, public services as well as the private sector) when collecting and using personal data for bona fide purposes, and to make available data assets such as verified attributes that are currently unavailable, thus allowing them to improve the quality of the services offered while reducing their costs/prices
• Gets dogs barking: By enabling low cost sharing of quality personal data, safely, under individuals’ control, the right sort of investment would not only achieve the above quality/cost benefits for existing services, it would also unleash an explosion of innovation, creating new markets especially in the area of PIMS (Personal Information Management Services) that enable individuals to use their own data to make better decisions and organise and manage their lives better. This is an area where the right SNIB investment could catalyse and ‘crowd-in’ significant new private sector investments.
• Addresses non-financial policy priorities: the same investment in the same infrastructure will help restore trust over the collection and use of personal data, help rebalance concentrations of data power and wealth, and build checks and balances into how the data economy works.

The Scottish Government has already signalled its broad support for this approach in its Data Vision for Scotland, 2020 where:
• Data are used to support the delivery of outstanding public services.
• Citizens feel confident that personal data are being shared responsibly to create better and more responsive services which meet their individual needs.
• Citizens readily know how to and can access personal information held about them, allowing them to confirm accuracy and to choose if they wish to create their own personal data store. “

In addition, the Scottish Government’s Online Identity Assurance National Stakeholder Group recently concluded that: “the digital identity solution should be built around a ‘Personal Data Store’ – a move that might essentially allow a user to have greater control of their own data and who might access it.”

Solving the problem of personal data would also help solve many other problems, for example generating step-change reductions in the costs of delivering public services while improving the quality of outcomes, enabling more personalised, joined-up service to be created without adding cost or friction. This is particularly important when it comes to responding to another key mission: an ageing population and wider population health.

We therefore strongly urge that one of the core missions of the SNIB should be to invest in new infrastructure that places the collection and use of personal data on a new, inclusive basis that empowers citizens as full and equal participants in the digital economy, reduces friction, cost, effort and risk for all parties, and enables the innovation of completely new, personalised services in both public and private sectors. This will lead to a more inclusive society and economy, including supporting those who are hardest to reach and support.

We have answered this question in our answers to the question above.

We do not have any particular observations on this question beyond the points made in previous questions which speak of the emphasis and focus of the bank.

We do not have any particular observations on this question.

It is possible to have a PLC CIC. Some consideration should be given to whether the Bank should operate as a CIC. Apart from that, we do not have any particular observations on this question.

The recommendations we made earlier in relation to patient capital and the time horizons could have an impact on sources of capital. If the Government uses tax incentives inventively, it may attract new sources of funds by, for example, offering tax breaks for organisations and individuals putting money into the SNIB. For example, corporations like Apple have large sums of money (currently $285bn cash) that they cannot take back to the states.

We do not have any particular observations on this question beyond the points made in previous questions which speak of the emphasis and focus of the bank.

We do not have any particular observations on this question beyond the points made in previous questions which speak of the emphasis and focus of the bank.

We do not have any particular observations on this question.

Given the points made in our answer to Question 3 above, it is extremely important that Ministers have expert advice, including those with experience of trying to deliver mission-led projects needing patient capital.

We do not have any particular observations on this question.

We do not have any particular observations on this question.

We do not have any particular observations on this question.