05 May 2006
Scottish Enterprise might be allowed to dip into its reserves to resolve a £60m budget crisis, it emerged this week.
Enterprise Minister Nicol Stephen has told the development agency that the Scottish Executive is examining its resource accounting system to release cash funds to help bridge the £60m funding gap.
It was a way of ensuring the agency could release reserves, the minister said.
At a meeting of the Scottish Parliament's enterprise committee on April 25, Scottish Enterprise chiefs admitted that management errors and a failure to act quickly enough had led to an overspend of £33m on its 2005/06 budget.
The committee was told this week that the funding gap was nearer £60m, since there was also a recurring shortfall of £25m on the 'non-cash' side of the budget, which covers depreciation and capital charges on its assets.
Giving evidence to the committee, which is conducting an inquiry into the agency's budget, Stephen said that the £25m spent from last year's budget on economic
development projects should have been set aside to cover 'other costs', such as depreciation and property expenses – which contributed to the overspend for 2005/06.
Stephen said: 'We are looking at giving [Scottish Enterprise] resource cover and to release cash resources. Resource cover is not additional grant. It is a way of ensuring that they can release their reserves.'
The Enterprise chiefs argued last week that Treasury restrictions stopped them using their own £45m reserves to cover the shortfall.
PFmay2006
