At the peak of the COVID-19 pandemic the UK Tory Government invested £1.1 billion (£1,100 million) on 1,190 in businesses that were unlikely to become economically viable.
Presided over by then Chancellor and current Tory Leadership candidate Rishi Sunak, the Futures Fund previously raised eyebrows as it invested taxpayers’ money in such businesses as a hashish merchandise firm and a hedonistic get together planner!
In minutes of the state-owned British Business Bank’s (BBB) audit committee assembly in June 2021, Dharmash Mistry, a Non-executive Director, said:
“Most of the companies in the [Future Fund] portfolio had . . . limited chance of growth to a sufficient scale for success” and would due to this fact turn into “zombie businesses”.
Minutes from a BBB audit committee assembly in February 2022 included a warning from Mistry, a skilled early-stage investor with a number of non-executive positions, that the portfolio was “likely” to have “a significant tail of dormant companies and it would be helpful if this could be signalled in advance to manage expectations”.
“Due to the early-stage nature of venture capital investments, write-offs are relatively high, with financial returns driven by a number of high-performing outlier companies.”
No due diligence investigations were undertaken prior to investing.
Such companies are often required to repay their Future Fund loans at a premium, leading to insolvencies amongst companies the Future Fund was meant to assist.
Kenneth Gibson MSP said:
“The fact that no due diligence whatsoever was done before handing out up to £5 million per fledgling business in the middle of a pandemic is quite staggering.
“I am sure there will have been serious businesses in amongst the recipients, but this £1.1 billion could have been spent on businesses that were actually active and seeking to grow, not poorly those with little or no future.
“First there were the Personal Protective Equipment contracts that went to those with ties with the Tories instead of actual manufacturers, and now this. It all comes at a cost to businesses across Scotland and the UK that actually do merit investment and support.”