Scotland business

Scottish government writes down £140m in loans and guarantees

The BiFab Methil yard in Fife Image copyright Getty Images
Image caption A £37m loan to the BiFab fabrication company is now valued at £2m

The Scottish government has had to write down nearly £140m in loans and guarantees, most of them to private companies, that have become worthless.

The figures have been revealed in official accounts for the past year.

They include a £45m loan to the Ferguson shipyard on the Clyde and a £21m guarantee repayment fee from Liberty Steel.

The Scottish government said its "support for private companies has protected hundreds of jobs".

The auditor general's 2018/19 report on the government's consolidated accounts show that the overall budget of £36,915m was underspent by £778m.

As well as the write-downs, the government's £37m loan to the BiFab fabrication company, which has yards in Fife and Lewis, is now valued at £2m.

'Backward step'

And loans of £40m to keep Prestwick Airport in operation are now worth £7m.

Meanwhile, the auditor general Caroline Gardner has criticised the detail of budgeting at Holyrood.

Ms Gardner accused ministers of taking "a step backward" with the amount they are making available to the watchdog.

She said there was a lack of detail in the budget plans set out by Scottish ministers, at a time of heightened uncertainty for public services.

The auditor general also refused to sign off accounts for the new carer's allowance.

Image copyright Getty Images
Image caption Prestwick Airport received loans of £40m which are now worth £7m

She said it was not clear how that money is being spent, partly through a Whitehall department.

"Parliament needs better information to be able to better scrutinise ministers' financial decision-making and to ensure value for money is achieved from a limited budget pot," she said.

"There is a lot more work to be done to manage Social Security Scotland's current reliance on the DWP.

"More complex and costly benefits are due to be delivered by the agency over the next few years, which increases the potential impact of error and fraud.

"The agency needs to think about what arrangements will be needed to manage that scenario."

Image copyright Getty Images
Image caption A £45m loan to the Ferguson shipyard on the Clyde has been written off

Scotland's finance secretary, Derek Mackay, said the Audit Scotland report had given the government's accounts "a clean bill of health" for the 14th consecutive year.

Mr Mackay said: "We continue to operate in a challenging financial climate as Brexit, and the increasing risk of a no deal scenario, remains the biggest threat to our economy and public finances as we take steps to try and mitigate the impact of such an outcome.

"Under the current devolution settlement, the Scottish government is not permitted to overspend its budget.

"As a consequence, we have consistently adopted a position of controlling expenditure to ensure we live within the budget caps that apply, while maximising spending on public services.

"Any money which is underspent in a financial year is carried forward in full into the next year and is invested in public services."

'Out of his depth'

The Scottish Conservatives described the loan write-offs as "a staggering waste of public money".

The party's finance spokesman Murdo Fraser said: "The Scottish government complains endlessly that they don't have enough money to spend and blames the UK government at every turn.

"Now we learn that £135m has just had to be written off due to failed investments.

"This is a staggering waste of public money which is entirely in keeping with Derek Mackay's total failure to manage Scotland's public finances.

"He is, quite simply, out of his depth."

Related Topics

More on this story