Scottish National Investment Bank funding: FOI release

Information requested

The Scottish National Investment Bank (the Bank), where the money is coming from to fund the Bank, and whether it is from the £2 billion budget underspend from 2011 till now, £900 million in the last couple of years.

Response

The £2 billion in capital will be provided to the Scottish National Investment Bank to invest over several years. The target date for full capitalisation is 2028 and information on the capital to be provided for the Bank by Scottish Ministers can be found in the Financial Memorandum which is available here: https://www.parliament.scot/S5_Bills/Scottish%20National%20Investment%20Bank%20Bill/SPBill43FMS052019.pdf.There is further updated financial information in a letter to the Scottish Parliament in January 2020 that can be found here:
https://www.parliament.scot/S5_EconomyJobsFairWork/Inquiries/20200110-CabSecFEFW-SNIB.pdf

Over 2018-2021, and as part of the £2 billion that is to be provided, the Scottish Government is making £490 million available for pre-Bank investment. This £490 million is included within the three most recent budget settlements agreed by the Scottish Parliament. This includes the £150 million Building Scotland Fund and £340 million in other funding for a pipeline of investments focussed on the Scottish Government’s climate change ambitions, as set out in the 2019 Programme for Government.

Provision of the remaining £1.5 billion for the Bank will be part of future budget settlements to be agreed by the Scottish Parliament.

The case for establishing the Bank is strengthened by the unprecedented challenges brought on by the coronavirus (COVID-19) outbreak. As a mission-oriented investor, the Bank will be in a unique position to respond to significant challenges facing Scotland, and can influence the direction of economic recovery while ensuring social and economic returns. Therefore, the Bank will work with the public sector and business community to shape an economy with fair work, inclusive growth and netzero emissions at its heart. A precursor Bank will play an immediate role in supporting the economy through alleviating the impact of current disruption on businesses by deploying expertise in response to the coronavirus.

Your request touched on the use of the Fiscal Framework and the Scotland Reserve. This has only been available since 2017-18 and its purpose is to enable the Scottish Government to manage its expenditure and to smooth the volatility of tax revenues. Information on the purpose and operation of the Fiscal Framework and Scotland Reserve is available here: https://www.gov.scot/publications/agreement-between-scottish-government-united-kingdom-government-scottish-governments-fiscal/ This explains that the Scottish Government may only draw down £100 million a year in capital for the entire administration so, as a basis for providing the £2 billion for the Bank, the Scotland Reserve will be insufficient.

You may also be interested in the most recent position as regards the Scottish Government’s approach to management of the Scotland Reserve which is contained in the 2019 Fiscal Framework Outturn Report and is available here: https://www.gov.scot/publications/fiscal-framework-outturn-report-september-2019/pages/11/

About FOI

The Scottish Government is committed to publishing all information released in response to Freedom of Information requests. View all FOI responses at http://www.gov.scot/foi-responses.