No clear framework
Taxpayers take £135m hit after supporting struggling businesses
Ferguson Marine received £45m in loans
The Scottish Government has lost an estimated £135m trying to prop up ailing industries after a series of investments and loans were virtually wiped out or sharply reduced in value.
Ministers poured £157m into into four struggling companies but has been forced to make significant writedowns.
They include two loans totalling £45m to Ferguson Marine Engineering and a £21.4m fee for providing guarantees to the Lochaber aluminium smelter. Both have been revalued as worthless, according to a newly-published report from Audit Scotland.
The valuation of loans and guarantees to troubled Burntisland Fabrications and loss-making Prestwick Airport, also declined significantly during 2018/19.
An equity stake of £37.4m to Bi-Fab, part of an overall package of £51m, has been reduced in value to £2m, while a £39.9m loan to Prestwick Airport is now valued at just £6.9m.
The Scottish Government has not developed a clear framework to outline its overall approach to financial interventions in private companies– Auditor General
The airport is up for sale and no date has been set to complete it, although Transport Scotland anticipates it may be achievable by the end of the financial year. The Government plans to monitor options for when it will sell its shareholding in BiFab.
The auditor general notes that the Scottish Government “has not developed a clear framework to outline its overall approach to financial interventions in private companies” outlining its approach to financial interventions in private companies covering financial capacity, risk tolerance and expected outcomes.
The Government is also facing a potential £190m fine from the European Commission for failing to properly manage two European Structural and Investment Funds for the period 2014 to 2020. One of the programmes, the European Social Fund, aims to help people improve their lives by learning new skills and finding better jobs.