Scottish National Investment faces up to £9m Circularity Scotland loss
- Published
Scottish National Investment Bank chair Willie Watt says it hopes not to lose all of the funding
The chairman of the state-owned Scottish National Investment Bank says he expects to lose more than half of a £9m loan given to Circularity Scotland.
Willie Watt told MSPs that the whole sum could be lost after the firm set up to administer Scotland's deposit return scheme called in administrators.
Circular Economy Minister Lorna Slater said she was forced to delay the scheme until 2025 after being put in "impossible position" by Westminster.
The UK government rejected this claim.
A spokesperson said the decision to delay was entirely made by the Scottish government.
Circularity Scotland CEO David Harris said the scheme remained "viable" even after the UK government imposed conditions including the removal of glass from the initiative.
The publicly-owned Scottish National Investment Bank agreed a £9m debt facility with Circularity Scotland in May 2022 to fund start-up costs for the administration of the deposit return scheme.
Ms Slater, who survived a vote of no confidence in parliament on Tuesday, described the collapse of the firm as a "disaster" for its 66 employees.
Mr Watt told Holyrood's Economy and Fair Work Committee: "We don't know exactly what the impact will be but I think it's fair to say there will be significant losses on the loan we have made to Circularity Scotland."
He added: "I'm sure that the losses will be in excess of over 50% but I hope that they are less than 100%."
The investment bank chair said Circularity Scotland, a non-profit organisation which is funded by the drinks industry, did not have "sufficient capital" to deal with the delay from March 2024 until at least October 2025.
'Fiercely independent'
Administrators are working through a "hierarchy of creditors", Mr Watt told MSPs, including employees, trade creditors and banks, before reporting back in a "short number of weeks".
He insisted the loan was agreed following "significant due diligence" from the bank and said there had been no involvement from the Scottish government in its decision.
"We make all our decisions totally independent of the Scottish government," he said. "We are a fiercely independent institution."
He said the investment bank was not considering suing the government to recover the money.
"I do not think that would be an appropriate course of action but we will look at all options that we have."
Circular Economy Minister Lorna Slater has blamed the UK government for the delay in the recycling scheme
Ms Slater told BBC Radio's Good Morning Scotland the scheme had been delayed earlier this month because the UK government made "pernicious" demands at the "last possible minute".
"The interference we've had from the Conservative government at Westminster to torpedo our scheme had these negative consequences for Scottish businesses, for Scottish workers and of course for our flagship recycling scheme," she said. "It is devastating for all of us."
The Green MSP said that, as well as demanding the removal of glass from the scheme, the UK government had requested that the Scottish plans to put a 20p deposit on certain items should match UK plans for a scheme to be launched in 2025.
"But the kicker is they don't have the regulations for that, they can't tell me what those are," she told BBC Scotland.
'Impossible'
"You can put together deposit return schemes without glass - there are a few of them in the world, it's not the best way to run a scheme but you can do that.
"The problem is these other conditions that the UK government dropped on us at the last possible minute. They made it impossible."
She said she could not comment on what would happen to funding provided by the Scottish National Investment Bank.
"The investment decisions of the Scottish National Investment Bank are for them, they are independent of government," Ms Slater said.
Circularity Scotland estimated hundreds of millions of pounds have been spent by it, investors and retailers in anticipation of the scheme, while its service partner Biffa had spent about £80m on infrastructure.
"I don't think that that will be lost because we do intend to go ahead with the deposit return scheme," Ms Slater said.
"It is delayed now until 2025 because that is when the UK government say they will be able to get their scheme up and running."
Former SNP minister Fergus Ewing was among those who voted against Ms Slater in Tuesday's vote of no confidence - which was defeated by 68 votes to 55.
He has been praised by drinks firm leaders for "great courage and integrity" after he said Ms Slater did not "enjoy the confidence of business".
In a letter signed by dozens of figures from the Scottish drinks industry, seen by the PA news agency, they said they were grateful to the SNP MSP for his "efforts to persuade your colleagues to halt the scheme".
However, the BBC understands the SNP is considering withdrawing the whip from Mr Ewing, who also voted against the government on the issue of Highly Protected Marine Areas and gender recognition reform.
The party, which said SNP MSPs should support the government, is expected to take disciplinary action in the near future.
SNP MSP Fergus Ewing has been critical of the Scottish government's recycling scheme
The Scottish National Investment Bank was set up in November 2020, with its objectives said to be "aligned" with the government's economic strategy - including funding projects designed to cut carbon emissions, boost innovation and reduce inequalities.
Ministers pledged to fund the bank with £2bn over 10 years.
Mr Watt said the bank had added 13 new investments to its portfolio in 2022-23 and committed £221m of capital, a 56% increase on the previous year.
Its income rose to £10.7m from £1.9m in 2021-22, "greatly reducing the taxpayers' commitment to cover our operating costs", he told MSPs.
Scottish Liberal Democrat economy spokesman Willie Rennie said there were "serious questions" about the £9m loan.
He warned that taxpayers could be among "the long list of people left out of pocket by the chaos wreaked by the Scottish government".
Jamie Halcro Johnston, business spokesman for the Tories, accused Ms Slater of refusing to listen to businesses or Circularity Scotland about the deposit scheme.
He blamed her for "the loss of Scottish jobs and the scandalous waste of millions of pounds of taxpayers' money".
- Published7 June 2023
