Call to reset ‘ill-conceived’ state-backed bank
A top academic has called for a full review of the government’s £2 billion Scottish National Investment Bank (SNIB), saying it is unfocused and ill-conceived and has had a limited impact.
Professor Ross Brown, Professor in Entrepreneurship and Small Business Finance at St Andrews University School of Management, says in a new paper that the state-backed bank has suffered from “mission creep” and needs to be reset.
Prof Brown’s paper, released by the think tank Reform Scotland, lauds the concept of SNIB, but criticises the Scottish Government’s emphasis on its broad mission – set around net zero goals – rather than specifically on backing growth companies.
He recommends the Government channel resources to SNIB from what he calls “poorly performing” organisations such as Scottish Enterprise.
He notes public attention on the pay awards to the bank’s team. Its CEO, who left in February, was on a salary of £235,000 and received a £37,375 bonus just months after taking up the job.
Less than two years after the bank’s launch, Prof Brown says: “SNIB looks unfocused and ill-conceived, and this vagueness has created an unhelpful mission-creep.
“It is not an effective strategy for a publicly-owned bank, particularly given the very high levels of remuneration being awarded to the senior management team.”
“The bank needs a clearer delineation of its core strategy and customer base. Fundamentally, the Scottish Government has to decide if the bank is designed to help develop the green infrastructure of the Scottish economy or to propel business growth in SMEs in Scotland.– Prof Ross Brown
Prof Brown says that if Scotland is to become “a genuinely ambitious, entrepreneurial, so-called start-up nation, public policy in Scotland will have to become much bolder and imaginative than at present.
“To do this, the Scottish Government needs to hit the reset button on SNIB.
“The bank needs a clearer delineation of its core strategy and customer base. Fundamentally, the Scottish Government has to decide if the bank is designed to help develop the green infrastructure of the Scottish economy or to propel business growth in SMEs in Scotland.
“The two are very different objectives and using the same instrument to achieve both seems at best ill-advised and at worst foolhardy.”
Chris Deerin, director of Reform Scotland, said: “Reform Scotland welcomed the creation of SNIB and continues to believe it is a commendable and important project.
“Its early months have not been trouble-free, but this is often the case with start-ups, and in our experience it has an excellent board and a strong executive team. It is exactly the kind of big, ambitious policy experiment that Holyrood should be embarking on, and we’d like to see similar ambition and risk-taking in other areas of government activity.
“We see no reason why SNIB should not be a long-term success. And we hope this paper, in its spirit of constructive criticism, can play a small part in helping it towards that happy outcome.”
The bank’s framework emerged from a report by government adviser Benny Higgins whose report on rebuilding the post-Covid Scottish economy was also criticised by Prof Brown.
Last week, Reform Scotland called for directly elected mayors as pat of a process of giving powers over local taxation, including business rates, to Scotland’s 32 local authorities.
David Lonsdale, director of the Scottish Retail Consortium, said handing control of the £2.8 billion business rates levy to councils would be a “retrograde step”.