SCOTLAND’S state-owned investment bank is facing the loss of a £9 million loan to Circularity Scotland after the firm appointed administrators.
The Scottish National Investment Bank (SNIB) used taxpayer cash to invest in the firm set up to run the Deposit Return Scheme (DRS), however the bank acts independently from the Scottish Government.
We told yesterday how Circularity Minister Lorna Slater announced that the firm had appointed administrators as an “unforgivable consequence” of the UK Government’s intervention over the DRS.
Westminster would not allow the Scottish scheme to include glass, by refusing to grant an exemption to the post-Brexit Internal Market Act (IMA), and also set a number of conditions on the recycling project.
As the scheme was not set to be launched in England and Wales until October 2025 at the earliest, the Scottish scheme was delayed until then.
Slater has repeatedly stated that the DRS could not go ahead as she was unsure of which regulations, such as the bottle deposit rate, will be imposed by UK ministers.
And now after Slater (pictured below) survived a no-confidence vote, attention has turned to the risk that a “significant” sum of the £9m loan, or possibly all of it, could be lost by the SNIB.
In evidence to Holyrood’s Economy and Fair Work Committee on Wednesday, SNIB chair Willie Watt told MSPs: “We don’t know exactly what that impact will be. But I think it’s fair to say there will be significant losses on the loan that we have made to Circularity Scotland and we will report those losses once we know what they are.
“I’m sure that the losses will be in excess of over 50%, but I hope that they are less than 100%.”
During the committee session, Watt insisted that the bank “couldn’t have known the future” and insisted the bank made “considered decisions” on the risk of the investment.
“Sometimes people make mistakes, sometimes people get things wrong, sometimes the facts are different from the way you thought they would be. That’s part of being an investor,” he added.
The chair said that the SNIB will consider lessons learned, adding: “Sitting here before you knowing what we know today and having gone through the detailed investment papers, I don’t think we were incompetent in the way that we did our diligence.”
Asked by Tory MSP Graham Simpson if the whole £9m could be lost, Watt conceded: “Yes, we could. That is the truth.”
Watt denied that Scottish ministers influenced the investment bank’s decision to fund Circularity Scotland, adding: “We make all of our decisions totally independent of the Scottish Government. We are a fiercely independent institution.
“There was no involvement from the Scottish Government in our decision to make the loan.”
Watt (pictured above) said that SNIB were approached by Circularity Scotland, and said the lenders took “comfort” from ministerial statements which committed to the scheme.
Watt’s comments came after Slater said she could not say whether the SNIB would be reimbursed for the loan.
She told BBC Radio Scotland’s Good Morning Scotland programme that Circularity Scotland’s decision to call in administration was “absolutely a disaster” for its 66 employees.
The company had been set up to run the DRS, a recycling initiative which imposes a refundable deposit on drinks sold in cans and bottles.
Slater said: “The interference that we have had from the Conservative Government at Westminster to torpedo our scheme has had these negative consequences for Scottish businesses, for Scottish workers, and of course or flagship recycling scheme.
“The decision to stop the scheme was because the UK Government had put us in an impossible position.”
Asked what will now happen to the cash from the SNIB, Slater said: “The Scottish National Investment Bank is independent of the Scottish Government, so that isn’t something we have any sort of say in.
“The investment decisions of the Scottish National Investment Bank are for them, they are independent of Government and they make their own decisions about that investment.”
Willie Rennie, LibDems economy spokesperson (pictured above), said: “This is an extremely difficult time for Circularity Scotland staff, whose jobs are at stake because our two governments are incapable of working with one another.
“The £9m loan from the Government-backed bank raises serious questions about whether that money would be lost in the event of its collapse, adding taxpayers to the long list of people left out of pocket by the chaos wreaked by the Scottish Government.
“Staff need to know if they will be paid. Taxpayers also need answers on the amount outstanding on the loan and whether any of that debt can be recovered in the event of administration.”
It comes as Slater refused to comment on reports that SNP MSP Fergus Ewing is facing losing the party whip after voting with Tory, Labour and LibDem MSPs to remove the Green minister.
