The Scottish Government’s National Investment Bank made a huge £16m loss in the last financial year, with bosses attributing some of that loss to the £9m loan to Circularity Scotland. The institution, which will be run independently by ministers, will receive a billion pounds of public money to invest in businesses.
However, the organisation confirmed in its latest financial reports that it had a total loss of £16,633,000, which is almost double the amount of money lost in 2021/22 (£8,559,000). One of their most important investments was in the trustee of the failed deposit return scheme , with £9 million of taxpayers” money being given to them.
Circularity Scotland plunged into administration this summer after the recycling initiative was cancelled by the Scottish government following a dispute with Westminster. This meant that it was unlikely that the loan would be repaid, and the bosses admitted that the value of the loan for them is practically zero.
His decision to hand over the money to Circularity Scotland was questioned by MSPs at Holyrood in June, with executives denying that any interference from the SNP executive had persuaded them to do so. But just a month later, uncovered emails found out that Nicola Sturgeon was endorsing the app.
The statement from the Scottish National Investment Bank revealed that they had an “unrealised loss of £17.8 million”, which is “mainly due to adjustments reflecting the underlying performance of the invested companies. This includes an unrealised loss of £4.5 million recorded at Circularity Scotland Limited for the financial year ending 31 March 2023.”
Chairman Willie Watt said: “Our ability as an organisation to deliver knowledge, investment and impact has grown significantly. As an institution, we are coming out of our initial phase and are becoming an increasingly established organization that is implementing our business plans solidly.
“The general economic climate was a challenge for companies that wanted to increase their investments. As a development bank with a special focus on strategic and long-term investments, we have worked to support innovative and growth-oriented companies in coping with these conditions in the implementation of their ambitious business strategies.
“Despite our first investment loss after the end of this financial year, we continue to work towards a positive net return across our entire portfolio and demonstrate responsible and productive management of public capital.”
Humza Yousaf was questioned about this defeat at Holyrood on Wednesday and defended the decision to hand over £9 million in public money to Circularity Scotland. He claimed that it was “right” that this loan was granted, and at the same time criticized the British government for blocking the deposit return system.
The bank confirmed in its accounts that it had already reduced the value of its investment to £4.5m in March 2023 due to a delay in the programme, but it was now worth between £0m and £1m. She added that this “post-balance sheet event” was not reflected in her accounts, but acknowledged that her investment in Circularity Scotland Ltd “has now been valued in a range between £0- £1 million.”
Claire Baker asked Yousaf what lessons have been learned about the influence of government policy on banks’ decision-making. He said: “I think it was the right decision by them to invest in Circularity Scotland at the time and I’m just frustrated that we were in the position we are in and not able to deliver a Scotland-only programme that was operational.
“There are undoubtedly a number of lessons to be learned in relation to the lessons of the deposit return system and the circularity of Scotland. I will not go into the whole story of where we stand with the deposit return system and where we got to.
“But the recent announcements by the Prime Minister give me little hope that there will be a UK-focused program by the time the British government proposes in 2025. So we had practically torpedoed our own program and no British program in sight. “