The chair of Scotland’s national investment bank, set up to provide capital to small and medium businesses, has vowed to accelerate action after the institution failed to spend its lending budget last year.
The Scottish National Investment Bank, established in 2020 to boost investment for infrastructure projects and companies with high growth potential through public funding, deployed £129mn in the year to the end of March, according to its annual report released on Tuesday.
The bank failed to spend its £200mn annual budget allocated for business lending by around a third. The institution has a target to lend £2bn to businesses over ten years, of which £258mn has been committed so far.
SNIB chair Willie Watt told the FT that it was not surprising that the bank had got off to a slow start given it has been focused on getting up and running in its early phases.
He added that the institution had concentrated on hiring staff to secure the expertise needed to evaluate funding applications and monitor delivery. In the last financial year, the bank doubled its staffing numbers from 30 to 61.
“I don’t think that there’s any sense of ‘we think we have nailed it, and have done a fantastic job’,” said Watt, who previously spent 18 years running Edinburgh-based asset manager Martin Currie.
Watt said he was “broadly happy” with the bank’s progress, adding: “You can’t go from zero to £200mn without going through a period of build-up.”
Launched in November 2020, the bank has a mandate to invest in companies that will support economic growth and further the government’s goals of cutting carbon emissions, reducing inequality and promoting innovation.
It is a key part of Scotland’s first minister and Scottish National party leader Nicola Sturgeon’s attempt to show that an independent Scotland could create and sustain its own effective institutions outside the UK.
Supporters of the bank say it is crucial to developing Scottish companies that would otherwise struggle to get money from private-sector investors which have concerns over unproven technologies.
“What we can do is to be a catalyst and be a proving ground for private investment,” Watt said, referring to the bank’s support for companies involved in the rollout of electrical vehicle charging points.
Critics of the bank have said its “missions” are too broad and make it hard to judge the institution’s success or relevance.
“Questions about its remit remain unanswered,” said Rachel Cook, deputy head of policy at the Federation of Small Businesses, which represents UK business groups. “We would like to see direct targets for lending to small businesses.”
Ross Brown, professor of entrepreneurship at St Andrews university, said there had been a “clear failure to make SNIB visible” and cited “difficulties in interpreting what they should be doing”.
