£500m Scottish Growth scheme announced before UK Government approval

Derek Mackay - Holyrood

A new plan to guarantee loans to small businesses was announced in the Scottish Parliament before the idea had been approved by the UK Treasury, Finance Secretary Derek Mackay has admitted.

The £500m Scottish Growth Scheme, announced as part of Nicola Sturgeon’s programme for government on Tuesday, would see the Scottish Government guarantee loans from banks to small businesses in an attempt to boost the economy in the wake of the Brexit vote.

Sturgeon called it part of an “exceptional response to an exceptional economic challenge”.

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However the money needed to provide the guarantee would sit in a part of the Scottish budget not directly controlled by the Scottish Government.

Speaking to the Scottish Parliament’s Finance Committee, Mackay said the Scottish Government had announced the scheme before consulting the UK Government.

“We gave parliament the courtesy of knowing first” he said.

He has now written to the Chief Secretary to the Treasury, he said, and was hopeful he would be co-operative.

Scottish Conservative finance spokesman Murdo Fraser said it was an “amateurish approach” to government.

"Surely you should have had at least a conversation with them in advance to try ad understand whether support would be forthcoming, before announcing it with such fanfare," he said.

Responding to the announcement of the scheme, Federation of Small Businesses Scottish policy convener Andy Willox said: "Despite the current economic headwinds, businesses are still ready to invest.  Thus, we will be interested to see what sort of small businesses are eligible to take advantage of the £0.5bn Scottish growth scheme.  We need to make sure that government initiatives back our business base.”