![\"Sir](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2026\/08\/Sir-John-Elvidge.png\")
Former Permanent Secretary to the Scottish Government, Sir John Elvidge says the Scottish National Investment Bank (SNIB) needs a relaxation of its financial constraints, including an ability to raise capital in its own right.<\/p>\n
In a new report, Sir John urges the Holyrood government to collaborate with Westminster to create the conditions for that will ensure the state-owned bank\u2019s long-term role in the financial landscape as a \u201cmatter of strategic priority\u201d.<\/p>\n
He was commissioned to examine SNIB\u2019s performance over its first five years and assess its progress against its statutory objectives and missions.<\/p>\n
He states that ministers need to \u201cdecide\u00a0and give a clear steer on where, how and how far it wants the Bank to pursue the third party capital route.\u201d<\/p>\n
This was an issue that former Finance Secretary Kate Forbes was keen to achieve.<\/p>\n
Sir John warns of an \u201curgency\u201d to resolve issues around the bank\u2019s ability to become a \u201creliable source of long-term and repeat funding\u201d, explaining there will be \u201cnegative consequences\u201d if it is not clearly established and understood externally within the next year or so.\u201d<\/p>\n
He\u00a0writes: \u201cHaving to deploy capital effectively within the constraints of the public finance framework, which mean operating with annual financial contributions which must be deployed within the same year, with very limited ability to carry unused funds from one year to the next, has created significant inflexibility in the Bank\u2019s operations, running the risk of distorting decision-making.<\/p>\n
\u201cAnd having to operate in the marketplace without certainty as to the existence of the organisation beyond 2030 is presenting increasing challenges in terms of forming and managing long-term relationships of trust and confidence with investees and co-investors alike.<\/p>\n
\u201cIt will require action by both the Scottish and\u00a0UK\u00a0Governments to give the Bank the ability to manage, retain, carry forward and redeploy cash balances across years; and also to raise capital in its own right, so that it is no longer reliant on continuing capital advances from the Scottish Government beyond 2030.\u201d<\/p>\n
Sir John also warns that the SNIB will be watched closely by investors over the success of setting up a new university spinout fund, noting it will test \u201cits attractiveness to private investors and also of the extent to which the Bank and Scottish Enterprise are able to develop a strong, clear, credible, and mutually complementary partnership approach in this area.\u201d<\/p>\n
The former civil servant questioned its role in housing development, finding no evidence of the medium-long term impact of housing investment on regional and local economies, \u201cexcept where it unlocks a major strategic industrial development,\u201d arguing that its choice to invest in housing did not speak to the \u201ctransformational ambition\u201d expressed by the Government.<\/p>\n \u201cOne question that has been raised with me both by investees and by co-investors in relatively early stage businesses is whether the Bank\u2019s structural terms are fully aligned with its positioning as a relatively high-risk investor seeking to crowd others in: or whether in some respects, in particular the downside protections, they might in fact be more onerous than the circumstances require.\u201d<\/p>\n Willie Watt, chair of the Bank, said:\u00a0\u201cThe review recognises the scale of what has been achieved since the Bank was established. Over the past five years, we have built a new institution in a period marked by significant economic uncertainty and change, while remaining focused on delivering long-term impact for Scotland.<\/p>\n \u201cImportantly, the review not only reflects on our progress to date but also provides thoughtful recommendations to help shape the Bank\u2019s future development. We are encouraged that many of its themes align closely with the direction set out in our recently published Investment Strategy and Business Plan.\u00a0While strong progress has been made, we recognise that there is more to do.\u201d<\/p>\n Economy Secretary Stephen Flynn responded by saying; \u201cThe review concludes that the Bank has made strong progress since its inception, deploying over half of the \u00a32 billion in capital funding that has been committed to 2030. <\/p>\n \u201cIt has successfully established itself as a mission-led development bank and has already made an important contribution in supporting investment across Scotland. The findings reinforce those of Audit Scotland\u2019s report published in May 2025.<\/p>\n \u201cThe Scottish Government has discussed the review\u2019s findings with the Bank and agrees on the key areas for action. Together, we are developing a clear plan to take forward the recommendations, many of which are already underway, with defined responsibilities and timescales. <\/p>\n \u201cThe next phase of development will focus on maximising the Bank\u2019s impact, helping more businesses to scale up and innovate, unlocking investment in housing and infrastructure, and supporting the creation of high-quality jobs across Scotland.\u201d\u00a0<\/p>\n To date, the Bank has committed \u00a31.16bn with 53 live investments: 31% in debt, 34% in combined debt and equity, and 10% in equity; and it invested 25% in funds. It has yet to issue any guarantees.<\/p>\n Its smallest investment to date was \u00a3700,000; its largest \u00a370 million. A quarter of its investments were under \u00a35m; a fifth of its investments were more than \u00a345m; but the largest proportion ranged between \u00a35m and \u00a345m.<\/p>\n \t <\/div>\n![\"Construction,](\"https:\/\/dailybusinessgroup.co.uk\/wp-content\/uploads\/2022\/05\/Construction-housebuilding.png\")