Seòmar agus comataidhean

I am sorry—I am rattling through questions, because I have to leave at 11 am. I am perfectly comfortable with short responses, and not everyone needs to reply.

In the previous committee session, a new issue came up that has been reported in the media over the past few months. Scottish Investments Ltd, which is one of the entities under the bank, has secured phase 1 approval from the FCA to effectively become an investment vehicle to manage third-party capital in consolidating investments. I do not know whether that is something to be concerned about or excited about. Could you clarify?

Do you think that this is a bit of a distraction, given the scale of the losses that are being reported and the increase in annual losses?

That was not a criticism—it was just a question.

Last but not least, there has been a lot of discussion—rightfully so—in the media about the level of pay and bonuses in public bodies. I am sure that you have been following the debates that the Parliament and this committee have had on that very issue in recent weeks.

In 2023-24, £865,000 was paid in bonuses to SNIB staff. The outgoing chief executive’s package was £340,000 and the chief financial officer’s package was £240,000. Those amounts are way above normal public sector payments. We understand the reasons for that, but do you appreciate the public’s concern about the scale of bonuses that are being paid, while the bank is making losses?

That is very helpful. Just out of interest, did you personally have any exit interviews with any of the outgoing chief executives of the bank? They have had quite a high rate of turnover. Does that cause you, as the sponsor element of the Government, any concern, given what is happening in other public bodies and the turnover rates of chief executives?

I have certainly met the current outgoing chief executive, and I have had an informal conversation with him. I would not describe it as a formal exit interview. We will absolutely comply with best practice within the Scottish Government in that regard. If we need to, we will give further consideration to that.

Al Denholm was appointed soon after I joined, and it was the interim chief executive who was in position when I joined the Scottish Government, so I was not in this current position when the previous chief executive left.

I will finish with two very brief questions, the first of which brings me back to the wider discussion that we had in the previous evidence session on this issue and which you might have followed. I was interested in the bank’s support for small businesses, not necessarily start-ups. I appreciate that it is not part of its remit, but anecdotal feedback is that smaller investment sums from the bank have been very difficult to come by.

Of course, those things are often the duties of other organisations that provide Government investment, such as Business Gateway and the enterprise agencies. However, what happens when they say no, when the private market says no and when the big banks say no? Is there a perception that people can come to SNIB and get lower-level funding—say, less than £500,000? It seems very much geared at the higher end of the market, and the investment portfolio seems to support that. Do you think that we are missing an opportunity here to support small businesses in Scotland through what is a publicly owned bank?

Right. I guess that I am playing devil’s advocate here. You can perhaps see the rationale for the college saying that, as its maximum liability in the venture is £1, it does not want a figure of £4.7 million to be in any way perceived as a potential liability, should the JV fall, for example.

Auditor General, in paragraph 16 of your report, you refer to “Two further material misstatements” regarding the 2022-23 accounts, which were subsequently corrected. Do you know what those “misstatements” were and why they were in the accounts in the first place?

Indeed, and that leads me to my final question. It might seem as if we are making a lot of fuss over a minor technical point about accounting and auditing, but the fact that you have produced a statutory report is itself unusual, which is why we are dedicating a whole hour of our committee meeting to it. Clearly, there are wider implications for other parts of the further and higher education sector where there are also joint ventures. What we are discussing here is a charitable venture, but many are not; I am aware of a number of colleges that are in financial joint ventures or which have created third-party entities with private companies for, say, apprenticeships, investment in new buildings and assets and so on. There are wider implications particularly for the college sector, which, as you acknowledged earlier, is already under incredible financial stress. Are you aware of any other areas where this could come up as an issue? Might it change the auditing practices relating to joint ventures involving colleges or other public bodies?

What would your advice be to those colleges that are interested in this committee session and might be watching and thinking about their own accounting practices and the repercussions of this case?