AN INDEPENDENT Scotland will have to nationalise its banking system to deliver the investment needed for a fairer society, one of the SNP’s Westminster economics team has said.

George Kerevan said that unless the state directed lending away from speculation into socially useful projects like housing, even an independent Scotland would be “blowing hot air”.

A member of the Commons Treasury Committee, Kerevan told the Radical Independence Conference in Glasgow yesterday: “We have to nationalise the banks. We have to nationalise them and put the flow of investment and the flow of lending into social means, rather than for the use of the highest profit. If we don’t do that, if we forget about doing that, then nothing will change.”

Kerevan said a future Scottish Government would take over the country’s share of RBS - the rump of Scotland’s post-crash banking sector - which is 71 percent owned by UK taxpayers.

An independent Scotland could also create a dedicated bank to help exporters and a raft of municipal savings banks so that banks were no longer just “machines for mortgages”.

He said: “If there is an independence referendum within the next two years - and I think there will be - and Scotland is independent in the next three or four years, it’s unlikely that RBS would be sold off by then because its shares are in such a dire state.

“Its infrastructure and its loanbook would therefore fall in large measure to the Scottish Government, so in the present timescale, a Scottish Government could end up owning the RBS located within Scotland and that would automatically give you a state bank.”

Kerevan said he also wanted “strategic anti-capitalist reforms within an independent Scotland”, including wealth taxes.

His ideas are a sharp break with past thinking. The 2013 White Paper on independence made no reference to nationalising banks and suggested taking cash for Scotland’s share of RBS.

Kerevan, a trained economist, warned the global economy was “shuddering to a halt” and traditional ideas of creating “a few more jobs” by cranking up Scottish growth “will not work”.

He said an independent Scotland would need to “take control again of the labour process” and reverse the creeping expansion of the working week and cap it at 40 hours or less.

The East Lothian MP also wanted left-wing governments to work together to reform the EU institutions.

However his biggest idea was diverting some of the “huge glut of capital” worldwide away from speculative bubbles into socially useful investment.

He said: “We have to socialise the investment. It can’t be done overnight. It can’t be done on a global scale. It has to be done country by country. It could begin in Scotland

“An independent Scotland will never be able to deliver the jobs that we need, will never be able to deliver the living standards that we want, unless we control investment, and that means controlling the banking system to a degree and putting it to public use.

“It’s not a solution to everything, it doesn’t fundamentally change the model of the market system, but it’s a start, it’s a breach in the system where we are. If we don’t do that then all we’re doing is blowing hot air.”

In July, Kerevan admitted independence would be “painful” for the first five years and could mean budget cuts as the country adjusted to the new economic regime.

Also speaking at the conference, Scottish Green co-convener Patrick Harvie said Brexit had made a second referendum “dramatically more the near future”.

He said Holyrood should make maximum use of its new powers and show it was making a positive difference to people's lives, and criticised the SNP for timidity: “Anti-austerity rhetoric has to be turned into anti-austerity action and anti-austerity budgets.”

RIC founder Cat Boyd said independence would be won by campaigning on workers’ rights.

“If we can encourage workers to stick two fingers up to their bosses, then by God we can convince them to stick two fingers up to the British state as well,” she said.

Reacting to Kerevan’s comments, Tory finance spokesman Murdo Fraser said: “The SNP leadership try their hardest to put on a business-friendly face.

“But not much further down the party we find those who believe that an independent Scotland would be a socialist nirvana.”