Enterprise quango hit by funding cash crisis
A SCOTTISH quango designed to help businesses grow through grant-funding has run out of money.
Steve Dunlop, chief executive of Scottish Enterprise, sent an email to staff ordering them to freeze all future support grants and cut internal budgets.
His memo explains ‘unforeseen factors’ have left the organisation – funded by the taxpayer – in financial crisis with more than a month remaining of the financial year.
He has drawn up a raft of cuts which include pulling the plug on new spending commitments unless the body is ‘legally committed’.
His curbs also suggest immediately halting the recruitment of new staff and cutting all travel unless absolutely necessary.
Scottish Enterprise’s funding is expected to be cut from £374million to £340million in the Scottish Government’s coming Budget.
Mr Dunlop outlined the savings which needed to be made in his email to staff, seen by the Sunday Mail. He said: ‘Scottish Enterprise is expected to find savings and our draft resource budget allocation for 2020-21 represents a 9 per cent year-on-year reduction.
‘Until the Budget is finalised and until we have concluded our discussions with the Scottish Government about matching our budget to our priorities, we have decided it is prudent to make no new spending commitments or offers of support for financial year 2020-21.’
The financial crisis comes as the Scottish Government prepares to invest £2billion of public money into its new Scottish National Investment Bank over the next decade.
Hundreds of firms rely on funding from the quango, with many companies receiving start-up funding to get off the ground.
The organisation has around 1,100 staff in 14 UK offices, with a further 33 workers overseas.
Employees were astonished at the announcement, with one member of staff saying: ‘In effect, this stops Scottish Enterprise from carrying out the duties they’re meant to be doing to support Scottish businesses and the economy.
‘If no new funding commitments are made over 2020-21, effectively it means some small and medium businesses, who had previously relied on support during start-up and growth activity, will no longer be supported.’
The quango admitted its budget for the financial year had been fully allocated.
A spokesman for Scottish Enterprise said: ‘Any suggestion that Scottish Enterprise has called a halt to funding for small and medium-sized businesses is false.
‘The truth of the matter is we have stimulated a high level of demand for strategic investment and our budget for the current financial year, ending in March, is now fully committed.
‘We have an indicative budget of around £340million for our next financial year, beginning April, which will deliver over 3,000 projects across Scotland with companies of all sizes.’
A Scottish Government spokesman said: ‘The Scottish Government is working closely with Scottish Enterprise to identify opportunities to ameliorate in-year financial pressures arising from the Budget.’
‘No new spending commitments’