Reform Scotland

Mission Accomplished? Assessing the Performance of the Scottish National Investment Bank

Mission Accomplished? Assessing the Performance of the Scottish National Investment Bank

Business expert Professor Ross Brown, in paper for Reform Scotland, says SNIB is “shackled”, its mission “vague” and its impact “limited”

Reform Scotland, the independent, non-partisan think tank, has today released a new paper written by Professor Ross Brown, Professor in Entrepreneurship and Small Business Finance at the School of Management, University of St Andrews, in which he calls for a full review of the operation of the Scottish National Investment Bank (SNIB).

The paper – Mission Accomplished? Assessing the Performance of the Scottish National Investment Bank lauds the concept of SNIB, but finds that more than a year after the bank’s launch its strategy, operation and impact have only had a very modest impact.

Professor Brown finds:

  • The Scottish Government’s broad mission for SNIB has unintentionally prevented the firm-specific investments it needed to make
  • Only seven companies have received funding so far, creating a very limited economic impact
  • The Scottish Government should consider channeling resources to SNIB from poorly performing organisations such as Scottish Enterprise

"SNIB looks unfocused and ill-conceived, and this vagueness has created an unhelpful mission-creep. It is not an effective strategy for a publicly-owned bank, particularly given the very high levels of remuneration being awarded to the senior management team.

“Most importantly, SNIB’s strategic deficiency is reflected in the very small number of projects currently being funded by the bank, which in turn is likely to lead to a very modest economic impact in the short to medium term.

“If Scotland is to become a genuinely ambitious, entrepreneurial, so-called “start-up nation”, public policy in Scotland will have to become much bolder and imaginative than at present. To do this, the Scottish Government needs to hit the reset button on SNIB.

“The bank needs a clearer delineation of its core strategy and customer base. Fundamentally, the Scottish Government has to decide if the bank is designed to help develop the green infrastructure of the Scottish economy or to propel business growth in SMEs in Scotland. The two are very different objectives and using the same instrument to achieve both seems at best ill-advised and at worst foolhardy.”

“Reform Scotland welcomed the creation of SNIB and continues to believe it is a commendable and important project. Its early months have not been trouble-free, but this is often the case with start-ups, and in our experience it has an excellent board and a strong executive team. It is exactly the kind of big, ambitious policy experiment that Holyrood should be embarking on, and we’d like to see similar ambition and risk-taking in other areas of government activity.

“We see no reason why SNIB should not be a long-term success. And we hope this paper, in its spirit of constructive criticism, can play a small part in helping it towards that happy outcome.”