WIREDGOV

The Scottish Government has earmarked £150 million as the first step to establishing a Scottish Investment Bank, delegates at the Scottish Trades Union Congress conference in Perth were told today.

The Scottish Government will work towards establishing a Scottish Investment Bank to support business growth by initially bringing together Scottish Enterprise's existing Scottish Co-investment Fund, Scottish Venture Fund and Scottish Seed Fund.

First Minister Alex Salmond said:

"The Scottish Government is using every lever at our disposal to protect jobs, protect skills, protect businesses and families through the downturn. Today's announcement will see the first steps towards a Scottish Investment Bank, pulling together Scottish Enterprise and European funding to support businesses with the growth potential to help Scotland make a strong economic recovery.

"Our economic recovery programme has been underway for some time now. With this further boost of European funding, a total of £95 million, our six-point recovery plan is supporting more than 20,000 jobs and 75,000 more training opportunities. More than 50 measures, including 350 million pounds in accelerated capital spending, are being implemented to provide immediate and direct help to households and high streets across Scotland.

"Collectively, our efforts and commitment as a government will help us to emerge from the current pressures to secure our overarching purpose - to increase sustainable economic growth. However, our efforts are only working due to partnership and strong relationships with the European Commission, the enterprise agencies and with our social partners, such as local authorities and the STUC.

"Indeed it was the STUC who suggested offering a guarantee of completion of apprenticeships such as in the scheme in Northern Ireland. Not only did our Budget include this suggestion, but it allocated £16 million to a better, more comprehensive modern apprenticeship scheme in Scotland.

"The STUC supports key aspects of the Scottish Government's economic agenda: greater fiscal stimulus from the UK Government; halting the proposed cuts which look set to reduce Scotland's budget by at least 500 million pounds; agreement that growth should be driven by a range of key industrial sectors and the importance of Scotland's energy sector.

"The establishment of a Scottish Investment Bank will be a significant addition to the collaborative work, across government and industry, to strengthen Scotland's economy, reputation and competitive edge."

Included in today's announcement is a £20 million award from the European Regional Development Fund (ERDF) towards the Scottish Venture Fund, bringing the combined spending power of the funds to £150 million.

The Scottish Seed Fund (SSF) provides equity investments from £20,000 to £100,000, matched by private sector, to support early-stage businesses that meet set criteria and are keen to grow. The SSF invests in start-ups and early stage companies.

The Scottish Co-investment Fund (SCF) is an equity investment fund set up by Scottish Enterprise, and partly financed by the European Regional Development Fund to invest £100,000 to £1 million in business deals of up to £2 million, mainly focused on high technology innovative growth companies. The SCF does not find and negotiate investment deals on its own; instead it forms contractual partnerships with its private sector partners. The SCF Partner finds the investment opportunity and offers to invest its own equity cash. If the opportunity needs more money than the SCF Partner can provide, it can call on the SCF to co-invest.

The Scottish Venture Fund (SVF) was set up by Scottish Enterprise to invest up to £2 million in equity finance deals of between £2 million and £10 million. The fund operates similar to the SCF fund i.e. invests alongside the private sector in technology based companies.

An SME is an enterprise which employs fewer than 250 persons and which has an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro.