Scotland’s auditor general has said Nicola Sturgeon’s government needs to be more open about its loans to private firms following a row about a bailout for a Glasgow-based shipbuilder.
Caroline Gardner said the Scottish government needed to produce clear rules on how and when it would lend money to businesses, as well as publish clear accounts covering all public spending in Scotland.
Her intervention follows the disclosure that ministers in Edinburgh have lent £45m in two tranches to Ferguson Marine Engineering Ltd (FMEL), which is building two new ferries for the state-owned ferry operator Caledonian MacBrayne.
Opposition parties have been critical of the loans because FMEL is owned by Jim McColl, a multi-millionaire tax exile and business adviser to the Scottish government. He has previously campaigned in support of Alex Salmond’s demands for greater financial independence for Scotland, and Salmond supported McColl’s buyout of FMEL before the 2014 independence referendum.
McColl said he was not a Scottish National party member and that one of the loans was needed partly to help cover the extra costs of contract changes for the ferries. The loans carry commercial interest rates.
Sturgeon has used FMELs shipyard near Greenock for election campaigning, and opposition parties say ministers failed to be transparent about the case for the loans. Gardner indicated she too was unhappy about the handling of the Ferguson loans and other Scottish government loans to the offshore engineering firm BiFab, which was threatened with closure until a government-backed rescue.
The Scottish government “needs to be more transparent about its overall approach to providing loans to private companies and develop a clear framework to guide its decision-making around how it invests public money”, she said in her report on this year’s Scottish government consolidated accounts.
The accounts showed the Scottish government underspent its £34.5bn budget by £339m. That involved an underspend of £267m in its budgets for day to day spending and a £52m underspend in its budgets for building projects.
Gardner again chastised ministers for not yet producing full accounts for all public spending in Scotland, despite repeated pledges to do so.
She said publishing full accounts that set out the government’s liabilities and its assets, ranging from pensions liabilities through to the value of its historic buildings, was essential in allowing proper scrutiny of spending and policies.
In its introduction to its assessment of this year’s accounts, Audit Scotland said: “The Scottish budget is now more complex and is subject to greater uncertainty and volatility as a result of new tax and borrowing powers arising from the Scotland Acts in 2012 and 2016.
“The increasing uncertainty over the impact of the UK’s withdrawal from the European Union adds further complexity and risk to the Scottish government’s finances as it makes choices over spending and levels of tax and borrowing.
“Comprehensive, transparent and timely reporting of the Scottish government’s budget and financial performance has never been more important in this new environment.”
Kate Forbes, the Scottish government’s public finance minister, implied they would take her criticisms on board. “We will continue to work with the Scottish parliament and key stakeholders as we take forward the parliament’s new budget process, which will enable increased scrutiny of our budget process,” she said.
