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Before the meeting started, we had a discussion to get our heads around some of the numbers in your report. Perhaps you could help to clarify our understanding of some of the top-level numbers.

One of the key facts on page 3 is that £785 million in capital has been committed for investment by the bank since it launched. However, exhibit 1 shows £1.1 billion in capital allocation from the Government over the course of the bank’s existence, much of which is made up of financial transactions, as you have said, and a smaller amount of resource allocation, of which there was zero in this year’s budget. Can you talk me through how the two numbers correlate? My reading of that is that the Scottish Government has allocated more than £1 billion to the bank but that, in total, the bank has invested around three quarters of a billion. Is there money that is sitting in a pot somewhere, waiting to be invested?

Thank you for that. Obviously, you can see my questions from afar, because you have pre-empted my next one, which was about the business investment group. That is very positive feedback. Thank you both.

The Public Audit Committee’s job is to scrutinise the spending of public money. Is there any sense or feeling in any of the work that you did that people are concerned that, due to the high-risk nature of the bank’s activities, it is playing fast and loose with huge sums of public money? By their nature, some of those businesses will fail. I presume that a percentage for that is factored into the business model. Given that public finances are extremely tight and that cuts are being made in many areas of public service, including vital lifeline services, people will be looking at a quasi-private bank with 80-odd people in it, spending billions of pounds of public money. Do you think that that is a concern?

Thank you for your opening statement, Auditor General. This is probably the first time since I joined the committee that you have given an opening statement that did not criticise the organisation concerned in any way, shape or form. I know that you always criticise respectfully and with an intensely academic view of the world, but is there a particular reason why the report did not pick up any governance, performance or operational issues at all?

The other big selling point of the bank is its so-called ability to unlock private investment. My understanding is that the bank would not regularly invest at the start-up stage of a business but, rather, at the so-called growth stage, although there is some ambiguity about what that means. In your report, you talk about £1.4 billion of funding

“attracted from other investors as a result of investment by the Bank”.

That is a bold statement to make. How do you quantify the idea of unlocking private capital? It is a bit like saying that you switch on a light bulb and mosquitoes come to it. Did you instigate that by switching the light on? It is easy to put that figure down as a metric of success because it is such a big number, but it must be very hard to pin down in real terms.

Thank you for that explanation. It is refreshing and nice to see a positive report that identifies good governance and operational practice. I am sure that other committee members will cover some of the areas that you raised, particularly around potential improvements to impact reporting and awareness of the bank’s activities.

It is interesting that, in your answer to me and in your opening statement, the areas of risk to the investment bank’s long-term success that you mentioned are external factors. The first area of risk relates to the bank’s mission to be a perpetual investment fund. You mentioned that the barriers to that are Treasury rules, as opposed to the bank’s own operations. The other external factor relates to the annual capital allocation of funds from the Scottish Government, which, again, is outside the bank’s control, albeit that the bank is owned by the Scottish Government. How will it be able to address those external factors?

Is there any evidence that the Scottish National Investment Bank is, in a sense, distorting the investment market by competing with private venture capitalists, private banks and other such forms of investment, or is it working well alongside—again, not competing with—other publicly funded organisations such as the British Business Bank and the National Wealth Fund, which are available UK-wide?

That sounds very positive. Maybe some private banks could learn lessons from the risk investment strategy.

I have spoken to a few organisations that have dealt with SNIB over the years. In your stakeholder engagement, did you speak to any organisations or companies that were denied investment to find out what feedback they were given? Has Audit Scotland identified any gaps in the Scottish Government’s approach to making high-risk investments?

Limited options are available to folk when the private market says no. Auditor General, you might have watched the session that we had last week with the strategic commercial assets division, in which we unearthed the fact that the division has made zero interventions, other than those that it inherited when it was set up. I have had feedback that organisations such as Business Gateway can make small grants to people, which SNIB does not do, but that there are limits to how much money is available to it. SNIB does not offer small or medium-sized amounts of capital funding to start-ups or small businesses. Is there a gap in the market that SNIB is not filling or that it could fill?

During 2024-25, £174 million was allocated—I use that example as the financial year has ended already. I presume that that money was made available, as opposed to it being moved physically into the bank’s coffers. We are trying to get our heads around whether the money has been allocated to investments. The bank cannot underspend or roll over cash, so I presume that the money is either not drawn down at all by the bank or it is sent back to the Government. Of the £174 million, a percentage of that may not have been invested. The money that has been allocated is a made-up number—you can say that £1 billion has been allocated, but if the bank cannot spend that amount of money during the financial year, it would, effectively, not have been allocated to it. That is the sort of transaction that I am trying to get my head around.

Is £3.2 million the base cost of keeping the yard’s lights on and keeping the workforce in it?

Moving on to another strategic investment that is under your control, has the Scottish Government undertaken any current analysis of developments with regard to Liberty Steel?

Mr Irwin, you will be aware of yesterday’s media reports about attempts to adjourn a winding-up petition that was lodged by one of Speciality Steel UK Ltd’s creditors and could result in it being forcibly moved into compulsory liquidation. Given that the Scottish Government has had and still has interactions with the company, is that a risk?