Around £140million in Scottish Government loans and guarantees to private companies including the Lochaber Smelter have dramatically reduced in value, it has emerged.
A report by public spending watchdog Audit Scotland has revealed £45million in loans to Ferguson Marine, which is building two new island ferries, has been written off.
The audit of the government’s 2018/19 accounts also disclosed an equity stake of £37.4million in mothballed engineering firm BiFab was reduced to £2million to reflect expected losses.
A £39.9million loan to Prestwick Airport was also reduced to £6.9million, while a £21.4million fee for providing financial guarantees to Lochaber Aluminium Smelter was reduced to nil to reflect new accounting standards.
The report examined an arrangement entered into by the Scottish Government in December 2016 when Liberty House and Simec took over the Fort William Smelter.
Under the arrangement, ministers created a financial safety net whereby the government offered a 25-year guarantee to purchase contracted power if the business was unable to pay for it.
In return for providing the guarantee the Scottish Government received an annual fee. In its accounts, this fee was classed as a £21.4m asset. But as result of new accounting standards, its value has been reviewed down to zero.
In addition, the Scottish Government has had to put £33m into its accounts in case there is a default on the fee payments.
Last night Highlands Tory MSP Donald Cameron called on the government to be fully transparent about the smelter’s financial arrangements.
Mr Cameron said: “The Lochaber Smelter is a very important source of employment and economic activity in the area and so it’s perplexing to learn that the valuation of a Scottish Government asset which relates to the smelter has been reduced to zero.
“In the light of this and other aspects of the report, it is clear to me that the SNP Government must act to ensure that there is full transparency about this matter.”
Lib Dem leader Willie Rennie said: “People will be surprised that SNP have been able to write off hundreds of millions of pounds of loans without even having a clear framework for how it treats private companies.
“Ministers are using taxpayers’ money as gambling chips but never seem to have to face the music when the deal goes wrong.”
Caroline Gardner, Auditor General for Scotland, said: “The Scottish Government’s financial reporting has taken a step backwards at a time when the uncertainty surrounding EU withdrawal will pose unprecedented challenges for the management of public finances.”
Finance Secretary Derek Mackay said the government’s accounts had been given a “clean bill of health” by Audit Scotland.
