SNIB needs rule change to loosen taxpayer ties – Daily Business

The state-owned Scottish National Investment Bank (SNIB) will continue to rely on taxpayer support unless the UK Treasury eases the rules over its finances, according to a watchdog.

The bank was launched in 2020 as an arms-length institution to invest in commercial projects that will help address the climate crisis, boost innovation, and improve the wellbeing of communities.

Audit Scotland says it has made good progress, committing more than £785 million into 43 businesses and projects and attracting £1.4 billion of private sector funding. It has helped create or safeguard more than 3,000 jobs.

It says the bank has been well run to date, generating £19m in income in 2023/24, more than covering its operational costs for the first time.

However, the watchdog says current financial rules are a barrier to the bank’s ambition of ending its reliance on public funding.

It says Scottish budget arrangements stop it carrying unspent public funding into the next financial year, while UK Treasury rules mean the bank cannot retain financial returns and recycle them into future investments. Without the ability to do this, the bank will need ongoing annual capital allocations from the Scottish Government to remain operational.

Stephen Boyle, auditor general for Scotland, said: “The Scottish National Investment Bank was set up to deliver economic, social, and environmental benefits for Scotland, as well as a financial return – and it’s made a good start on those ambitions.

“But for the bank to be successful, the Scottish Government needs to address the lack of flexibility around the bank’s budget, and the barriers presented by UK Treasury rules.

Commenting on the report, Deputy First Minister Kate Forbes said: “Audit Scotland’s report underlines the positive impact the Scottish National Investment Bank has had on the investment landscape.

“The auditor general also notes the sound arrangements made by the Bank and the Scottish Government on its governance, accountability and risk management.

“The report sets out clearly the complex financial and budgeting operating environment.  The Scottish Government is taking action to improve the financial position for the Bank, but this report is clear that the UK Government also needs to take action as part of the Spending Review process to ensure that the Bank can reach its full potential.”