The Scottish Government needs a new mechanism from which to borrow in large quantities, as it still could not afford to lend substantial sums directly from a Scottish National Investment Bank. This means that we will need to create so-called 'special purpose vehicles' to make that investment. A special purpose vehicle is a company set up to carry out one specific task but designed so that the finances are self-contained and do not bring any risk to anyone else. Generally, they are some form of limited company which means that if the project they are set up to carry out goes wrong, they do not bring down a parent company (or in this case, the nation's public finances).
This can only be done in circumstances where a project can be financially self-sufficient, either because it is income-generating or because it provides paid-for services to government via long-term contracts. An example of the former would be a national housing company which could borrow to invest in housing and repay the investment through rental income; or a national energy company which does the same by building profit-making, energy generating infrastructure to repay loans. The latter might be a national childcare company which could invest heavily in creating really high-quality childcare facilities and employ more first-rate child carers with the Scottish Government paying it to provide this infrastructure and those services over an extended period.
But there have been very bad experiences with attempts to create structures which take government spending 'off the books’, the most famous being the Private Finance Initiative. They have been incredibly inefficient and in many cases at least borderline corrupt. This is because they were largely created and run in secret by the financial industry for the financial industry (and this in the first half of the last decade, during which we now know the financial industry was totally out of control). They also lacked transparency and had little public interest represented in their governance (the structures through which they were run).
To remedy this, it is suggested that a new special purpose vehicle be developed: a 'national mutual company'. These would be private sector companies and so could borrow without limit. But they would be collectively owned and governed democratically. The best way to do this would be to constitute them so that every Scottish citizen would hold one non-tradeable share. This would give the people of Scotland collectively the legal ownership of the company and the democratic right to make decisions about that company. They would also be eligible for dividends from profits (a payment to all citizens from the profits of their national mutual companies). However, as company law is reserved to Westminster it is possible that this model would be blocked. If so, they should be set up with a constitution which behaved exactly as if all Scottish citizens were shareholders with a right for them to vote at the AGM and to still receive dividends.
These companies would then be limited only by their own business plan—as long as a business model is established that enables them to finance their activities, they would be unlimited in terms of how much investment they make. But they might also have an added bonus by genuinely engaging the wider population in major business decisions and in understanding and being interested in the governance of these large businesses. This could be a radical step in democratising the economy.