Sturgeon shame: SNP splurges public cash on failing businesses – £131m down the drain

Nicola Sturgeon on hopes for Scotland to 'trade freely' with EU

When you subscribe we will use the information you provide to send you these newsletters. Sometimes they’ll include recommendations for other related newsletters or services we offer. Our Privacy Notice explains more about how we use your data, and your rights. You can unsubscribe at any time.

Scotland’s main economic public body Scottish Enterprise wrote off £131million from failed investments, according to its annual accounts for the period between April 2010 and March 2020. The accounts showed that the biggest single loss during the last 10 years was the failed wave power developer Pelamis, as Scottish Enterprise wrote off £16.3million in 2014-15. A year later, £15.2million was also lost when another wave power company, Aquamarine Technology, entered insolvency.

The economic public body invested in the shares of businesses and provided them with loans or grants as part of its remit from the SNP Government, which has been in power since 2007.

Graeme Roy, the dean of external engagement at Glasgow University’s College of Social Sciences, criticised the public body for a “distinct lack of self-reflection” on economic policy.

He said: “Investments might not always work out, particularly when it is about stepping in to support a troubled business, a new or innovative business, or a piece of core economic infrastructure.

“But a key question about any strategic investment, particularly if the investment doesn’t work out as well as hoped, is to understand what worked and what didn’t.

“There doesn’t seem to be much in the way of critical evaluation or accountability for the big strategic decisions.

“If an investment doesn’t pay off, was it because it was always going to be a tough ask to turn things around, or because it was the wrong decision? Or . . . just executed badly?”

Overall, the accounts mentioned more than 760 cases of failed investment, but only gave details only on specific cases where the loss was greater than £250,000.

Both Pelamis and Aquamarine were supposed to build prototype devices to help bring develop renewable electricity through the power of the oceans.

However, they failed after running out of money as they were left unable to show that their equipment was commercially viable.

Other notable cases where the investment failed included £3.2million lost on Havelock Europa, a Fife shop-fitter and commercial furniture maker, after it went bust in 2019.

Another £2.7million was given into the Edinburgh-based NetThings, which created software to help manage energy, but this business went into administration towards the end of 2018.

The agency also made losses on Burntisland Fabrication (BiFab), which it cancelled the debt of £1.45million for in 2019.

Brexit LIVE: MEPs to FINALLY decide whether to allow UK trade deal [LIVE BLOG]
Sturgeon warning: Pandemic has clobbered Scotland’s finance [INSIGHT]
Scottish election latest polls: Alex Salmond could make surprise gains [POLL]

The Scottish Government had directly invested £37million into BiFab through equity and loans, and had also offered a further £15million loan facility.

BiFab, which had steel fabrication yards in Fife and the Isle of Lewis, went bust last year after it failed to secure any new contracts to build offshore platforms for wind turbines.

Other failed ventures included Scottish Enterprise losing £1.5million on Inside Biometrics, which went into administration and was dissolved in 2019.

The public body also lost £2.4million in 2017 by investing in Aberdeen company Gas2.

The company spent 10 years developing gas to liquid technology to be used in gas fields, but the drop in oil price meant the company was unable to raise further funding and so went into liquidation.

And £1 million was lost after being invested in social networking website Talent Nation, which launched in 2009 by former Scottish Sun editor Steve Sampson.

This is despite the website having Celtic midfielder Scott Brown and ex-Rangers striker Kenny Miller as investors, with it going into liquidation in 2011.

Scottish Enterprise also took the company to court over unpaid payments to Olympian Brian Whittle.

Tracy Black, the CBI Scotland director, said Scottish Enterprise was a “huge advantage” for Scotland overall to help businesses struggling with the aftermath of the Covid pandemic.

However, he added the public body needed to show it was “effective”.

He said: “With public finances strained as a result of the pandemic and decades of low growth, business and government must work together to ensure programmes are as effective as possible.”

A spokeswoman for Scottish Enterprise said: “Our equity investment activities are not without risk, however, many of our investee companies go on to attract significant further private investment and become globally successful businesses creating jobs and ultimately benefiting the Scottish economy in the longer term.

“Since 2003 Scottish Enterprise has invested £624m, which has, in turn, has leveraged £1.75bn in private sector investment, creating growth across the Scottish economy.”

Source: Read Full Article